Finland’s Local Government Pensions Institution plans to build a $125 million U.S. venture capital program with a fund-of-funds to be managed by Wellesley, Mass.-based Grove Street Advisors.
The portfolio will be weighted with technology funds managed by top-tier investment groups, says Catherine Crockett, a Grove Street general partner. The portfolio will also include a number of health care funds.
Grove Street will invest Finland’s capital over the next three years, and once all the fund’s capital is committed, there will be at least 15 funds in the portfolio.
Finland’s Local Government Pensions Institution manages $17.7 billion for 900 local member organizations. It began to invest in private equity funds in 1994 in Finland. Then it reached throughout Scandinavia and later expanded its portfolio into Europe. Today its European private equity portfolio is valued at $1.1 billion.
The pension’s foray into the U.S. market is not just an evolution of its investment strategy, Crockett says, but its timing is meant to coincide with the fund-raising efforts of top-tier firms like Battery Ventures, Kleiner Perkins Caufield & Byers and Sevin Rosen Funds.
All of them are expected to begin marketing new funds this year.
Once Grove Street is successful in building relationships with these firms, the Finns will eventually take over the management of its U.S. venture capital portfolio.