The $211.5B Florida’s State Board of Administration is preparing to launch a private credit co-investment program as part of a broader push to scale its active credit asset class.
During a recent investment advisory council meeting, John Mogg, senior investment officer for active credit shared that the co-investment initiative, still in the planning phase, would partner the pension with a third-party investment manager where the Florida SBA would send 75-80% of the deal flow that we see from existing managers into the program, with the third-party vendor contributing some of its own deal flow. The goal is to cut fees, improve transparency, and deepen insight into underwriting practices, he said.
“We’ve seen this in private equity — the savings on management fees and carry can be meaningful,” said Mogg.
The new co-investments wrap up a major repositioning of its private credit portfolio that included a secondary transaction in which it offloaded 50 limited partner interests focused on European and U.S. direct lending funds. The sale helped reduce the pension fund’s tail exposure, enabling it to reallocate toward more income-oriented assets, Mogg explained to the board.
“We weren’t locked into selling — we modelled the return scenarios and decided the IRR was basically capped, so it made sense to recycle capital into higher-quality income-generating credit,” he said, highlighting that about 25% of the assets sold were linked to equity-like exposures.
Advised by Evercore, the six transactions were finalized just before market volatility surged around the new U.S. tariff regime was implemented and other macro concerns. “We would have traded significantly lower had we had gone to market just a few weeks later,” added Mogg.
As of July 2025, the active credit portfolio was valued at $10B or 4.73% of the total portfolio, which includes 3.49% or $7.39% of private credit allocations and 1.23% or $2.61B of multi-asset credit.
Launched in 2023, with implementation beginning in 2024, the active credit portfolio includes both multi-asset credit and private credit. The first few initiatives for the portfolio included onboarding Aksia as the private credit consultant, transitioning data from Cambridge Associates.
The private credit portfolio is split between core strategies, including senior lending (50%) and satellite strategies such as distressed debt, capital solutions, real assets credit, credit opportunities, mezzanine, real estate credit and specialty finance — all with a target allocation ranging from 0%-20%.
The pension also added three new managers focused on European direct lending and three new relationships focused on U.S. direct-lending strategies. Within the bucket, Mogg highlighted targeting 50% in senior lending, within a range of 30-70%. The three new managers, focused primarily on European mid-market borrowers with Earnings before interest, taxes, depreciation, and amortization (EBITDA) between $10M and $50M. In the U.S., they topped up allocations to three existing mid-market managers with long track records.
Within private credit, the plan has earmarked a pacing of $2.25B in 2026 and $1.5B annually from 2027 through 2034.
On the multi-asset credit side, the team worked with Mercer to conduct a full risk-budgeting study, opting for 100% active management strategies. The team funded mandates in phases to avoid piling into tight credit spreads, selecting three MAC managers and three bank loan specialists, with high-yield and emerging market debt managers added by late August.
Looking ahead, the SBA plans to re-underwrite shortlists for high yield and may add one more manager this fiscal year. Emerging market debt allocations will be monitored over the next 12 months for potential upsizing.
Other priorities discussed during the meeting include deeper research into lower mid-market credit, commercial real estate lending, and asset-backed lending — areas that could present future expansion opportunities. As well, a potential Florida-focused credit tranche under the Florida Growth Fund Program is under review, though it would have to meet the same return and risk thresholds as national strategies, noted meeting materials.
The active credit portfolio returned 3.52% against a benchmark of 3.04% for its three months return and 10.31% against a benchmark of 9.06% for its one-year return, as of June 30, 2025.
