MassPRIM dedicated over $400m to diverse-owned PE managers in 2022

Many LPs are focusing on re-ups with existing relationships due to the current economic landscape. LPs with dedicated programs may serve as a valuable lifeline for emerging and diverse-owned managers.

Massachusetts Pension Reserves Investment Management Board committed more than $400 million to diverse private equity managers in 2022 as part of the system’s mandate to allocate at least 20 percent of its total fund to diverse-owned managers.

Several large pension systems have dedicated programs to allocate money to emerging and diverse-owned managers. These types of programs may prove critical for the new manager ecosystem as many LPs are eschewing younger, unproven shops in the uncertain economic environment.

In 2021, a bill was signed into law requiring MassPRIM to hike its allocation to emerging and diverse-owned managers to at least 20 percent. The $93.2 billion system launched its FUTURE Initiative to implement this mandate.

According to its 2022 report reviewing the FUTURE Initiative, MassPRIM allocated a total of $2.8 billion to diverse managers in 2022, with $424 million committed to private equity and venture capital funds.

Out of that pot, MassPRIM committed $60 million to managers considered as both emerging and diverse-owned. These commitments included $15 million each to 1315 Capital, Kinzie Capital, NewView Capital and Red Arts Capital, according to the report.

MassPRIM selected Hamilton Lane to manage the selection of private equity diverse-owned emerging managers in December 2021, the report said.

According to the report, MassPRIM also committed $30 million to the venture-capital focused Insight Capital Partners Vision Capital Fund II last year. This is a fund-of-funds slated to invest into 20 to 40 emerging and diverse-owned venture capital funds.

Insight Partners raised $100 million for this fund and, unlike the first offering, opened it to external LPs to invest alongside the manager’s employees. MassPRIM ranks as one of the biggest LPs in Vision Capital Fund II, the report said.

As of the end of 2022, MassPRIM holds more than $937 million in private equity assets under management dedicated to diverse-owned managers. This figure includes commitments made before 2022.

As of the end of June 2022, the system’s private equity portfolio stood at $16.9 billion, or 18 percent of its total fund. The system targets an allocation between 12 percent and 18 percent to private equity.

According to Buyouts affiliate publication New Private Markets, public system LPs that have diverse-owned or emerging manager programs include Connecticut Retirement Plans and Trust Funds, State of Michigan Retirement System, Los Angeles County Employees Retirement Association along with several systems based in Illinois and Chicago.

New Jersey Division of Investment also started an emerging managers’ program in 2021.