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Florida State Board buys stake in Providence Equity Partners

Jonathan M. Nelson
Jonathan M. Nelson

Florida State Board of Administration, Tallahassee, acquired a minority stake of less than 10% in Providence Equity Partners for $150 million.

Jonathan M. Nelson, Providence founder and CEO, informed the private equity firm's investors Monday in a letter that two of its limited partners bought a combined stake of less than 10%. Mr. Nelson did not identify the investors or specify the dollar amount or percentage of their interest.

SBA officials would not disclose the amount of the equity interest, said Dennis D. MacKee, FSBA communications director, who on Tuesday disclosed the deal that was made in July.

The board, which oversees $157 billion, bought a 50% to 75% stake in Providence Equity Global Group, which owns 10% to 25% of Providence Equity Partners, according to ownership ranges disclosed in a Providence filing with the SEC.

The $128.1 billion Florida Retirement System Pension Plan, which is among the $157 billion in total assets the FSBA oversees, made the acquisition as part of FRS' $6.4 billion private equity allocation, Mr. MacKee said. Funding will come through liquidity.

FSBA has a total of $450 million committed and invested with several Providence funds, including Providence Equity Partners VI and VII, Providence TMT Debt Opportunity and Providence TMT Special Situation. The board began its relationship with Providence in 2007.

“Bottom line we have a lot of faith in them,” Mr. MacKee said. No consultant was used.

“I can't imagine any circumstances it would change,” Mr. MacKee said of the board's commitments and investments in Providence's funds, which specialize in media, communications, education and information companies.

Providence might sell small passive stakes to other investors, Mr. Nelson said in the letter, but provided no details of such plans.

“We intend to use the proceeds for a number of growth-oriented initiatives over time, including investing in current and future Providence funds and further developing our firm's capabilities globally,” Mr. Nelson wrote in the letter, adding “we believe a private transaction is a better fit for Providence and have no plans to go public, nor does this transaction require Providence to go public.”

Providence has $21.1 billion in assets under management, according to its SEC filing.

Providence is the second investment management company in which FSBA has acquired a stake. In 2010, the board bought an undisclosed percentage stake in another private equity firm, Lexington Partners, for $41.25 million.

FSBA has $2.6 billion in private equity commitments and investments with Lexington —$600 million combined in Lexington Partners IV, V, VI and VII funds and $1 billion each in Lexington Co-Investment Partners and Lexington Co-Investment Partners II.

Lexington has $8 billion in assets under management, according to its SEC filing.

Stacey Tramonti, Providence spokeswoman and assistant to Mr. Nelson, couldn't be reach for comment. Andrew Cole, external public relations contact with Sard Verbinnen for Providence, declined to comment.