MassPRIM aims to increase PE commitments, co-investments in 2020

Staff hopes to increase private equity commitments by as much as $700m from 2019.

Massachusetts Pension Reserves Investment Management Board plans to hike its private equity fund commitments and co-investments in 2020, according to a presentation given to the board at its meeting February 4.

MassPRIM’s 2019 investment plan called for $1.4 billion to $2 billion in fund commitments. It ended up committing $1.6 billion. In 2020, it aims to invest $1.7 billion to $2.3 billion, a rise of between $100 million and $700 million from the year before.

In 2019, MassPRIM made $206 million in co-investment commitments, which made up 15 percent of its fund commitments. In 2020, it plans to hike that to $400 million, or 20 percent.

While MassPRIM plans to increase its PE allocation, it chose to make no changes to its allocation range from the year before. In 2019, the allocation range for private equity was 10 to 16 percent, while the actual allocation as of December 31 was 11 percent.

“There is sufficient headroom within the current asset allocation policy to increase these investments,” staff said in a presentation.

As far as general strategy, MassPRIM would like to target mid-cap buyout and growth strategies.

MassPRIM will also make a request for proposals for a new private equity consultant, as its current contract with Hamilton Lane will expire at the end of September. The pension also wants to hire an investment analyst for the private equity team. Last year, the fund added Sarah Zatoonian to its team, as Buyouts reported. The team has four members and is run by Michael Bailey.

As of December 31, MassPRIM’s private equity program had a 12.5 percent one-year return, gross of fees. Three-year returns were 20.3 percent, five-year net returns of 18.2 percent and 10-year returns were also 18.2 percent. All these numbers are gross of fees. PE was beaten out by global equity on one-year returns, but was the top performing asset class for all other annualized returns.

As of December 31, MassPRIM’s private equity portfolio consisted of $23 billion in commitments and had an $8.5 billion market value. The fund’s total AUM was $78.9 billion and it had 16.6 percent in returns for calendar year 2019, gross of fees.

Action Item: read MassPRIM’s most recent performance report here.