By David G.
The executive director and chief investment officer of the Massachusetts Pension Reserves Investment Board (MassPRIM), Michael G. Trotsky, would like to increase the fund’s private equity allocation range.
In providing the MassPRIM board with his goals for 2022, Trotsky listed increasing private equity’s allocation range to 12% to 18%. It is currently at 11% to 17%. According to the most recent figures on MassPRIM’s website – June 30, 2021 – it had $13.8 billion, or 14.5%, of its assets in private equity.
MassPRIM is looking to invest $2.7 billion to $3.3 billion in private equity funds and co-investments in 2022. Through July, it has committed $1.7 billion.
Trotsky also indicated a goal of raising private equity co-investment capacity to 40% of 2022 fund commitments. During the 2021-22 fiscal year, MassPRIM completed 20 new private equity co-investments, totaling $453 million.
For the year ended June 30, private equity was MassPRIM’s top-performing asset class, generating a return of 27.3%. Real estate was close behind at 25.5%.
For the fiscal year ended June 30, MassPRIM had a gross return of -3%, exceeding its benchmark return of -4.9%. It ended the fiscal year with $92.4 billion after breaking the $100 billion mark in late 2021.
Also at the board meeting, MassPRIM moved to diversify its international equity portfolio.
The board voted at its August meeting to allocate $450 million to Columbia Threadneedle Investments, $300 million to Causeway Capital Management and $250 million to Pzena Investment Management to provide active investment management services for a World ex-U.S. Value equity mandate.
The move, according to a memo by MassPRIM staff, will rebalance style exposures between growth, value and core; reduce manager concentration risk; and enhance the risk-return profile of the total International Equity portfolio. Currently three managers comprise 83% of the total active International Equity portfolio.
Both Causeway and Pzena are considered diverse managers. MassPRIM has now allocated more than $1.5 billion to diverse managers in 2022.
Additionally at the meeting, MassPRIM also committed up to $125 million in JEN Partners LLC’s JEN 8 LP fund and up to $200 million to TowerBrook Capital Partners’ TowerBrook Investors VI L.P.
JEN is seeking to close its fund at $650 million later this year. JEN focuses on providing high-yield short duration financing to homebuilders and making land development and project development investments in residential real estate. MassPRIM has previously invested $200 million in three prior JEN Partners funds since 2015.
TowerBrook is seeking to raise $4.75 billion for its fund. The private equity firm invests across multiple industries in companies in North America and Western Europe. MassPRIM has invested in four prior TowerBrook funds since 2008.
Additionally, the MassPRIM board gave the go-ahead for the plan to invest up to $300 million in a co-investment opportunity with Berkshire Group, a Boston-based firm which manages approximately $1 billion and owns, manages, or oversees 227,000 multifamily units. MassPRIM committed $25 million a year ago to Berkshire Multifamily Value Fund V. The co-investment opportunity is a multi-property apartment portfolio located across the Southeastern and Southwestern U.S.