MassPRIM invests in Georgian Partners, TA Associates

MassPRIM invested with Georgian Partners for the first time and followed on a TA Associates investment.

Massachusetts Pension Reserves Investment Management Board approved $175 million in private equity commitments at its November meeting.

The board approved the following allocations:

• $75 million to Georgian Partners Growth Fund V, managed Georgian Partners, an $850 million growth equity fund that will target investments in high-growth software companies expected to close in the fourth quarter of this year;

• $100 million to TA Select Opportunities Fund, managed by TA Associates, a $1 billion fund targeting middle-market growth companies in North America, Europe and Asia in technology, healthcare, financial services, consumer and business services.

Toronto-based Georgian is a new investment relationship for MassPRIM. Staff recommended Georgian because it provides “access to lower middle market growth-oriented companies,” according to Thursday’s meeting packet, which matches with MassPRIM’s goal to increase its growth equity exposure. Staff also praised Georgian’s deal pipeline, portfolio growth, and team.

MassPRIM has invested in six other TA funds. In May, MassPRIM committed $250 million to TA’s 13th fund. The TA Select Opportunities Fund will “invest in a select group of high-performing TA portfolio companies,” the meeting materials said.

These investments bring MassPRIM’s total 2019 commitments to just over $1.3 billion, close to its $1.4 billion to $2 billion goal for the year.

MassPRIM’s board also formerly issued a request for proposals on private equity consulting services. Its contract with Hamilton Lane expires next September.

As of Sept. 30, MassPRIM’s trust had one-year returns of 4.7 percent, against a 5.6 percent benchmark. Private equity one-year returns were 14.4 percent, three-year returns were 20.6 percent, five-year returns were 18 percent and 10 year returns 18.5 percent. MassPRIM reports all returns gross of fees. The private equity portfolio’s market value was $8.3 billion.

The board also was shown the trust’s 2019 comprehensive financial report, which included the fiscal year 2019 results.

As of June 30, the trust was valued at about $74.8 billion. FY19 returns were 6.1 percent, gross of fees, slightly below its 6.6 percent benchmark. Its three-year, five-year and 10-year returns beat benchmarks, but its returns since inception were also slightly below the benchmark, 9.4 percent versus 9.6 percent.

The private equity portfolio’s one-year returns were 18.51 percent, also gross of fees. That outperformed its benchmark of 15.49 percent. Its three-year, five-year and ten-year returns all also out-performed its benchmarks.