Florida Retirement System’s State Board of Administration (SBA), which manages the state’s $113 billion pension, has commenced a search for infrastructure managers and may make its first commitments to infrastructure funds by the fourth quarter of the year.
According to a June 2009 workplan presented to the SBA’s advisory board, the pension has hired consultancy firm Mercer to oversee the appointment. Interviews are currently being scheduled and the SBA aims to have the search completed by the fourth quarter of this year, according to the workplan.
The commitment would come out of the pension’s “strategic investments” allocation, which is capped at 10 percent of the pension’s net asset value and stood at 3.5 percent as of 30 April, 2009, according to pension documents. The allocation includes seven sub-asset types: infrastructure, timberland, multi-sector/hedge fund strategies, mezzanine, global equities, opportunistic/distressed debt and corportate governance activist investment strategies.
The actual amount to be invested in infrastructure is yet to be determined, but it could be in the hundreds of millions of dollars.
“Last June, the vision was to allocate $250 million to $750 million to the asset class across one to three external managers,” SBA spokesperson Dennis MacKee told InfrastructureInvestor. But after market conditions worsened in the second half of the year, plans to invest in the asset class were put on hold and the pension tended to other priorities, MacKee said.
He cautioned the investment range “evolves with the markets” and plans could change again.
However, it is “likely” that the pension will invest in its first infrastructure fund in the fourth quarter, he added.
Asked what attracted the SBA to the asset class, MacKee gave a one-word answer: “Diversification”.