Florida State Board of Administration is lining up a $125 million commitment that would push up its in-state technology investment program to $1 billion.
Hamilton Lane is responsible for most of Florida Growth Fund, which covers venture, growth and mezzanine debt investments in private businesses with significant presence in Florida.
A planned new commitment would bring Hamilton Lane’s portion of the in-state fund to $875 million, with the other $125 million allocated to JP Morgan.
“We’re currently undertaking due diligence on Hamilton Lane for the next tranche, and assuming that everything goes well, we would expect that we would allocate another $125 million” to the firm, Senior Investment Officer Trent Webster said at a March investment-committee meeting.
SBA spokesman John Kuczwanski said that planned commitment was in the final stages of due diligence.
Hamilton Lane has committed 77 percent of the capital from the previous $250 million it received through the program in 2015, making 11 fund investments and 11 co-investments, pension meeting materials show. The new mandate would enable it to continue investing, Webster said.
Florida Growth Fund was created by the Florida Technology and Growth Act of 2008, which allows the state of invest up to 1.5 percent of its pension assets in technology and growth companies with significant presence in Florida.
The program began with a $250 million commitment to a separately managed account with Hamilton Lane in 2009. Florida has committed an additional $500 million to Hamilton Lane for the program over the years.
The law was broadly worded, allowing for a variety of investments styles and including many different types of technology.
That flexibility was a key to the program’s early and sustained success, CIO Ash Williams said a recent meeting of Florida’s investment advisory committee.
While the lawmakers who created the fund were eager to see venture-style investing, Florida decided to begin with safer growth investments, rather than trying to explain venture’s high failure rates to lawmakers who might be less supportive of the program.
After venture, Florida also expanded the program to include mezzanine debt, with a $100 million mandate. It then brought in JP Morgan, based on a desire to avoid concentrating too much capital with a single manager.
Based on Florida’s $150 billion in pension assets, Florida Growth Fund could grow to up to $2.25 billion under current authority. While the program has room to expand, Williams said he’s not interested in moving too quickly.
“The ceiling has grown, and I think we have the flexibility on our own authority to scale this as we see fit,” Williams said. “It has been highly successful, and we continue to scale it without any external prodding.”
The Florida pension system has a 7.5 percent allocation to PE, and it committed $1.86 billion to the asset class in 2018.
Action Item: Check out materials from recent Florida Investment Advisory Committee meetings here https://bit.ly/2V3s71T