Florida Buying Piece of Lexington Partners

The Florida State Board of Administration has agreed to acquire a minority ownership stake in Lexington Partners, peHUB has learned. It is believed to be the first time that a state pension fund outside of California has bought into a private equity firm’s management company.

“Florida has had a multi-pronged relationship with Lexington for a long time, so from that perspective it’s not to surprising,” explained a source familiar with the deal. “But when you consider how poorly most other deals like this have performed, it’s got to make you wonder why Florida would want to double-down on a single firm.”

Neither Lexington nor Florida is commenting on the deal, but our understanding is that the deal is for a 9.9% ownership position at an enterprise value of around $1.8 billion (consider that last figure to be ballpark — a very spacious ballpark).

[Update: A spokesman for Florida State Board of Administration told me this afternoon that the deal closed on June 18, and involved a $41.25 million investment. He declined to say what percentage ownership stake that represents.]

The relationship between Florida and Lexington began in 1998, when the state funded a $1 billion co-investment program for Lexington to manage. It since has been one of the firm’s largest limited partners, including on a new fund that is in the final stages of being raised.

In other Lexington news, the firm today confirmed that it has acquired a large portfolio of co-invest, fund-of-funds, mezzanine and feeder assets from Citigroup. StepStone Group will manage the assets. peHUB first broke news of the deal last week.