Florida Growth Fund increases investment in Hillsborough County in 2019

Investing in technology has proven to be a good strategy for the Florida Retirement System.

The system has received nearly $433 million in returns on its investments since 2009, a new report from the Florida Legislature’s Office of Program Policy Analysis and Government Accountability said.

The state has benefitted as well. Companies that received investments from the Florida Growth Fund program created more than 3,000 jobs and made $111 million in capital investments in the year ended June 30, 2019. The newly created jobs paid an average salary of $55,116, exceeding the state’s 2018 annual mean income of $50,092, according to the OPPAGA report.

OPPAGA conducts an annual review of the Florida Growth Fund program. The State Board of Administration, which manages the Florida Retirement System Trust Fund, is authorized to invest up to 1.5 percent of net trust fund assets in technology and growth companies and in private equity firms.

Since its inception in 2009 through June 30, 2019 the program committed to invest $721.1 million in 53 technology and growth companies and 37 private equity firms. That’s an $83.6 million increase in total commitments since June 30, 2018, and includes investments in six additional technology and growth firms and four private equity firms. Hillsborough County accounted for nearly $16 million of the new investment year over year, while Pinellas County investments remains flat.

Specific investments are not identified.

Since it began, the program has distributed $432.9 million back to the state retirement system trust fund, with net internal rate of returns ranging from 9.1 percent to 12.2 percent, the report said. About $69.5 million of the total return was for the most recent fiscal year, ending June 30, 2019. The liquidity is the result of full companies exits, ongoing dividends, partial recapitalizations and interest payments from portfolio companies.

The Florida State Board of Administration contracts with two fund managers — Hamilton Lane and J.P. Morgan Asset Management — to manage the Florida Growth Fund program. The SBA requires all direct investments be made in companies that are headquartered in Florida or have a significant portion of their business in the state. The private equity firms receiving investments may or may not be based in Florida, but there’s only been one private equity firm without a Florida office that has gotten money from the Florida Growth Fund program, OPPAGA said.

See the full 2020 report here.

Separately, the State Board of Administration committed $30 million to venture capital in the fourth quarter of 2019, Venture Capital Journal reported. The SBA’s total venture capital commitment in 2019 was $430 million, compared to $75 million in 2018 and $125 million in 2017, the report said.

The SBA, with a total of $202 billion in assets under management, has about 7.3 percent of its total portfolio in private equity investments, with venture capital accounting for 22 percent of the private equity investments.