Mass PRIM May Commit $1.5B Next Year; Likes Emerging Markets

The $42 billion Massachusetts Pension Reserves Investment Management Board is likely pledge about $1.5 billion to the asset class next year. In 2010 the board has so far committed about $500 million to various buyout and special situation funds, especially those with non-U.S. focuses.

Next year expect roughly $1 billion to go to buyout, growth equity and venture capital opportunities, and about $500 million to distressed debt, both control and non-control, as well as mezzanine.

Said Investment Analyst-Private Equity Ryan Foscaldo: “These are rough targets that have not been approved yet, but this is what our level of investment activity will most likely be.” He added: “We are stage, style, strategy and geographically agnostic, although, we are increasingly looking into investment opportunities in emerging markets in Asia, Latin America and Central and Eastern Europe because of the underlying growth opportunities in these economies.”

The limited partner, with an actual allocation to private equity of 10.1 percent, is above its target allocation to the asset class of 10 percent. Below are some of the recent commitments made by the state:

• The pension pledged $40 million to South Africa-based Ethos Private Equity for its $750 million-targeted sixth fund. The firm does control acquisition, expansion and replacement capital deals in mid-size to large South African companies, and growth investments in South Africa and some parts of sub-Saharan Africa.

• Netherlands-based Gilde Buy Out Partners received a slug of $38 million for its fourth fund, earmarked for mid-market deals in Western Europe. Gilde Buy-Out Fund IV closed on June 30 with €800 million ($1.2 billion).

• Montagu Private Equity got a slug of $76 million for Montagu IV, a European buyout fund that invests in the manufacturing, health care, transportation, pharmaceuticals and auto-components industries. The firm is seeking to raise $3.15 billion for the fund.

• Hong Kong-based SAIF Partners received a pledge of $25 million for its fourth fund, a $1.28 billion fund, earmarked for growth equity and buyout deals in China and India.

• The state committed $150 million to GTCR Golder Rauner LLC’s GTCR X, for which the firm intends to raise $3 billion earmarked for investments in health care, financial technology and services, and information technology and services.

• The LP pledged $150 million to Avenue Capital’s Avenue Special Situations VI LP, earmarked for non-controlling investments in troubled U.S. and European companies.

In addition, the LP has committed a total of $170 million to six venture capital funds so far this year.