By David G.
Barry
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.