Massachusetts Pension Reserves Investment Management Board committed more than $400 million to diverse private equity managers in 2022 as part of its mandate to allocate at least 20 percent of its total fund to diverse-owned managers.
Overall, MassPRIM’s portfolio of diverse managers includes nine venture and/or growth funds and four private equity funds, according to a new report. Of the $424 million it committed last year, $158 million went to four managers of venture capital and growth funds, while $266 million went to three private equity managers.
MassPRIM said it made the following commitments to diverse VC managers last year: $15 million to 1315 Capital, a Philadelphia-based growth investor focused on healthcare; $30 million to Insight Partners Vision Capital Fund II, a New York-based fund of funds that invests in VC firms run by women and people of color; $15 million for NewView Capital, a growth investor based in Burlingame, California; and $98 million to Sequoia Capital China, a Beijing-based investor in early- to late-stage start-ups in China.
Other diverse VC and growth investors in the MassPRIM portfolio include Flagship Pioneering, a Cambridge-based VC focused on life sciences; Kepha Partners, a Waltham-based VC focused on tech; Keytone Ventures, a Beijing-based VC that makes early- and late-stage investments in China; Polaris Venture Partners, a Boston-based healthcare and life sciences VC; and Tidemark, Menlo Park-based growth investor.
Several large pension systems have dedicated programs to allocate money to emerging and diverse-owned managers. These types of programs may prove critical for the new manager ecosystem as many LPs are eschewing younger, unproven shops in the uncertain economic environment.
In 2021, a bill was signed into law requiring MassPRIM to hike its allocation to emerging and diverse-owned managers to at least 20 percent. The system launched its FUTURE Initiative to implement this mandate.
According to its 2022 report reviewing the FUTURE Initiative, MassPRIM allocated a total of $2.8 billion to diverse managers in 2022, with $424 million committed to private equity and venture capital funds.
As of the end of 2022, MassPRIM held more than $937 million in private equity assets under management dedicated to diverse-owned managers. This figure includes commitments made before 2022.
As of June 30, 2022, the system’s private equity portfolio stood at $16.9 billion, or 18 percent of its total fund. The system targets an allocation between 12 percent and 18 percent to private equity.
Besides MassPRIM, at least nine other pensions and insurance companies have special allocations for diverse or emerging managers, according to affiliate publication New Private Markets:
- Chicago Policeman’s Annuity & Benefit Fund
- Chicago Teachers’ Pension Fund
- City of Philadelphia Board of Pensions and Retirement
- Connecticut Retirement Plans and Trust Funds
- Los Angeles County Employees Retirement Association
- Northwestern Mutual
- State of Michigan Retirement System
- State Universities Retirement System of Illinois