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, a 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.