The Florida State Board of Administration has committed $60 million to an Abry Partners equity and mezzanine debt fund, a new report shows.
The SBA made the commitment to Abry Senior Equity Fund V as part of its “strategic investments” platform, which encompasses the Tallahassee, Florida-based pension fund’s private debt investments, according to a first-quarter report.
“The SBA has a running relationship with Abry and believes they are a very good manager, running a successful debt product,” a pension spokesman told Private Debt Investor. The pension previously made commitments to Abry Senior Equity Fund IV ($60 million) and Fund III, according to PDI data.
SBA will continue to focus on emerging market private debt, particularly as banks withdraw from direct lending here and in Europe, and lending to commodity-related businesses, the manager report states.
The pension plan’s strategic investments pipeline consists of 14 funds totaling $1.6 billion, according to the March board meeting minutes. The fund’s total assets under management totalled $191.1 billion as of 28 April.
SBA’s debt portfolio was about 30 percent of its total book by the end of last year, according to the March meeting documents. Over the fourth quarter alone, SBA made a total of $450 million in commitments to private debt funds, as Private Debt Investor reported.
Trent Webster, senior investment officer of strategic investments, said during a December board meeting that, in general, mezzanine debt investments in the lower mid-market can bring investors 8 to 10 percent coupons, according to a transcript of the meeting.
The pension’s junior debt strategy includes traditional mezzanine capital but can provide convertible preferred shares, he added.
On top of mezzanine debt, the pension is a big investor in distressed debt, which accounted for about half of its debt portfolio as of December, Webster also said that month.
“We like distressed as a strategy, even though it can be very cyclical, but it's the ultimate value strategy, and we think that we can get equity-like returns for less than equity-like risk.”