MassPRIM boosts emerging firms exposure

The $41bn pension system will commit between 5 and 10% of its future allocations to emerging managers, which Treasurer Steve Grossman says generate superior returns.

The Massachusetts Pension Reserves Investment Management Board has adopted a policy that will allocate 5 to 10 percent of new commitments to emerging managers across all asset classes, Treasurer Steve Grossman told Private Equity International.

“That’s a rough guideline, it’s not meant to be a requirement,” Grossman said. “Emerging managers have quite often performed particularly well, have been more nimble and have generated superior returns. Then obviously we want to take advantage of the best in class performers.”

MassPRIM also approved a resolution to issue an RFP for an advisor, or multiple advisors, to provide expertise in identifying emerging managers across the asset classes.

Steve
Grossman

The $41 billion pension system had already made a point of investing in emerging managers through its private equity portfolio, having committed more than $400 million to emerging firms since 2004. The pension system will likely retain its in-house emerging managers private equity programme, which does its own due diligence and maintains and supervises relationships with fund managers, Grossman said. The pension would likely increase its volume of commitments to emerging private equity managers under the new guidelines.

In addition to setting a guideline for investing in emerging managers, MassPRIM also made a priority to invest in funds managed by women and minorities.

MassPRIM’s former head of private equity, Wayne Davis, left the pension earlier this year to join fund of funds Pathway Capital Management. Another seasoned private equity professional, Michael Langdon, will leave at the end of the month to join Hermes GPE. According to Grossman, the pension system is currently fielding applicants for both positions.

In August, MassPRIM committed up to $245 million to Avenue Europe Special Situations Fund II and Denham Commodity Partners Fund VI. The pension system currently has a 10 percent allocation to private equity.