FSBA pounces on high valuations

The $204 billion Florida State Board of Administration is selling private equity and real-estate assets it believes are overpriced, chief investment officer Ash Williams says.

FSBA is steadily weeding out the mature allocations in its $10.9 billion private equity portfolio that still have to complete final realisations, and selling them in the secondary market.

In a process that in aggregate has accounted for about $3 billion to $4 billion over the last two years, Williams has bundled together weaker funds, sold them off and redeployed capital to higher-yielding areas, in a “disciplined pruning of the portfolio”.

He’s applied the same principles to FSBA’s $14 billion real-estate portfolio, which accounts for just under 9 per cent of assets under management. Here, he’s sold off highly sought after but dated apartment blocks and office space, freeing up capital to buy real estate that should have a higher value and return for the next 20 years.

“If an asset is a better fit for another investor’s portfolio, that will be reflected in its value to them and allow us to redeploy those dollars on assets better suited for our portfolio,”Williams says.

In private equity, higher-yielding assets are coming via new opportunities in Asia, where FSBA works with Asia Alternatives – an Asia-dedicated private equity fund of funds. It has led Williams to one fund investment that includes a portfolio company targeting India’s burgeoning second-hand car market.

The company’s founder has developed a sophisticated mobile app that combines car valuations, access to finance and insurance, and matching of buyers and sellers, in a strategy that Williams describes with his characteristic colour and detail.

“It’s the kind of thing that could be a unicorn,” he says. “It shows what an entrepreneur in an emerging economy can achieve with technology and a first-rate education.”

Williams’ team manages about 40 per cent of assets in-house. About half of the real-estate portfolio is run in-house.

For more on this story, see Florida SBA trusts long-term plan”.