MassPRIM’s PE pacing remains well under 2016 target

  • MassPRIM commits less than half planned 2016 PE allocation
  • Most commitments went to re-ups
  • PE portfolio cash-flow positive, netting 13.3 pct IRR

Massachusetts Pension Reserves Investment Management Board has committed a little less than half what it projected to allocate to private equity in 2016, pension documents show.

The $63.2 billion public pension originally projected $1.4 billion of commitments to PE and venture capital funds in 2016. Through October, MassPRIM had committed $665 million across 11 funds, 10 of which were re-ups with existing managers.

The retirement system’s lone commitment to a new manager went to Kainos Capital Partners, a Dallas mid-market firm that closed its second flagship fund on $895 million in October.

Almost half of MassPRIM’s 2016 commitments went to funds managed by VC firms, though it also re-upped to large buyout funds managed by Berkshire Partnersand Thoma Bravo.

MassPRIM’s slower-than-usual commitment pace continues its pacing through the first half. The $1.4 billion allocation it set at the start of the year was a slight decline from the $1.5 billion allocation target it set in 2015.

“It’s absolutely plausible we would not commit the full $1.4 billion, and that’s something we’re totally comfortable with,” spokesman Eric Convey told Buyoutsearlier this year.

Massachusetts has made more progress in its projected allocation to private credit funds. The retirement system had committed $565 million against its $800 million target through October, though it hasn’t approved any new commitments since June.

Unlike some pensions, which have started to see cash distributions from PE portfolios decline, MassPRIM’s private equity holdings remain cash-flow positive. MassPRIM’s fund managers called $710 million for new investments and distributed more than $1.1 billion through 2016’s first nine months, meeting materials say.

MassPRIM’s PE portfolio netted a 13.3 percent internal rate of return through Sept. 30, according to meeting materials.

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