Firms & Funds

MassPRIM trims PE allocation target

-
MassPRIM, pension fund, private equity, venture capital
Jill_InspiredByDesign/iStock/Getty Images.
  • MassPRIM plans to commit $1.4 bln to PE this year
  • System committed $1.5 bln to PE in 2015, off target of $1.7 bln
  • $60.3 bln pension to co-invest $140 mln with existing GPs

The Massachusetts Pension Reserves Investment Management Board plans to commit around $1.4 billion this year, 7 percent less than the $1.5 billion it committed to the asset class last year.

The plan was disclosed in an investment plan made available through a records request. The new target is $300 million less than the $1.7 billion commitment goal it had set for 2015.

Massachusetts’ $60.3 billion pension system held an 11.1 percent allocation to private equity through November, according to pension documents. While MassPRIM is still within range of its 10 percent target, recent volatility in the public markets may cause private equity’s share of the portfolio to rise in the near-term.

MassPRIM’s commitment pace is only a projection, not a hard target, said pension spokesman Eric Convey in an interview.

“If the right deals come along, they’ll get up there [to $1.4 billion]. If not, they won’t,” Convey said.

MassPRIM committed to 15 private equity and venture capital funds last year, including funds managed by Advent International, Blackstone Group, TA Associates and Thoma Bravo.

The pension also fell well short of its expected $700 allocation to private debt last year, committing just $375 million across three funds managed by Oaktree Capital Management and CarVal Investors. MassPRIM increased its private debt pace by $100 million for 2016.    

While it is stepping back fund commitments, MassPRIM plans to expand its co-investing efforts by about $140 million in 2016, according to state documents. The retirement fund only co-invests with managers with which it has an existing relationship. In 2014, MassPRIM approved Advent, Blackstone, CVC Capital, Onex Partners and Thomas H. Lee Partners for future co-investments.

The pension’s 2016 private equity plan also calls on staff to collaborate with other asset class teams on investment research, Convey said.

MassPRIM also expects to hire a new private equity investment team member. It lost private equity investment officer Peony Keve, who left in November after seven years with the system, Buyouts previously reported.

MassPRIM valued its private equity portfolio at $6.6 billion as of December 31, according to pension materials. The portfolio netted an internal rate of return of 13.21 percent since inception.

Action Item: For more information about MassPRIM’s portfolio, visit http://bit.ly/1JkMVvj