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Mass PRIM allocates $1.6bn last month to alts, plots further growth

The Massachusetts Pension Reserves Investment Management Board (Mass PRIM) in Boston made large inroads into alternative investment strategies with up to $1.6 billion being committed across private equity, credit, real asset and hedge fund mandates.

The most sizable slice of the alternative investment field was private equity, which saw more than $700 million in new investments approved in February.

Thoma Bravo funds, an existing manager in Mass PRIM’s $8.7 billion private equity portfolio, gathered most of the fresh capital. With offices in San Francisco and Chicago, the firm focuses on software and technology-enabled services sectors and has more than $35 billion in capital commitments. Up to $300 million was committed to Thoma Bravo Fund XIV LP, up to $150 million to Thoma Bravo Discover Fund III and up to $60 million to the Thoma Bravo Explore Fund.

The $79 billion public pension fund allocated to two Index Ventures funds. The firm has dual headquarters in San Francisco and London invests in technology companies with a focus on e-commerce, financial technology, mobility, gaming, infrastructure/artificial intelligence and security. The board approved a $20 million allocation to Index Ventures X and another $50 million to Index Ventures Growth V.

Lastly, trustees approved a $150 million allocation to Insight Partners XI, which has seen an influx of capital from other large institutional investors as of late as well.

Plans are underway to conduct an RFP for private equity consulting services as PRIM’s contract with Hamilton Lane expires on September 30.

The private equity team is also prepping to increase its allocation to the asset class with a commitment goal in 2020 of $1.7 billion to $2.3 billion to funds. This includes raising the co-investment capacity of the group to $400 million or roughly 20% of 2020 fund commitments.
The focus remains on small and mid-cap buyout and growth equity strategies, officials noted.

The private equity team is growing to with investment officer hires. Executive director Michael Trotsky announced that Alyssa Fiore has rejoined the PRIM private equity team last month reporting to Michael Bailey as an investment officer. She originally joined the team in 2016 as an investment analyst and was promoted in 2018 to the role of investment officer. After three years at PRIM she left to join J.P. Morgan.

Trotsky added that in welcoming her back to the team it was an indication that Bailey handled her resignation with respect and understanding with no burned bridges.

Also, within real assets, Eleni Klempner joined the pension system as a real assets investment officer in February. She reports to Eric Nierenberg, chief strategy officer at Mass PRIM. Most recently she worked in the real estate capital markets group of Wells Fargo Bank as a commercial real estate underwriter.

Meanwhile within the real asset class, officials approved an allocation of up to $500 million to Prudential Agricultural Investments. Mass PRIM is aiming to finish up its real estate and timberland consulting RFP this year as well. Cleveland-based Townsend Group currently oversees the system’s $7.5 billion real estate program.

When it comes to hedge funds, new moves are in the works too with plans to implement a carveout hedge fund portfolio into stable value and directional components. Additionally, there are plans to obtain approval for and begin implementing a new co-investment platform.

In February, the board approved the staff and investment committee recommendation to set up a co-investment program giving trustees the ability to upsize managers’ best ideas in the portfolio at lower fees.

Unanimously trustees also approved a total of $350 million in new hedge fund and credit strategies, which are housed in the system’s $7.2 billion portfolio completion strategies portfolio.

Serenitas Credit Gamma Strategy Separately Managed Account will have an initial allocation of up to $150 million. The strategy seeks to benefit from inefficient pricing in structured credit markets to generate attractive risk adjusted returns with low net risk to credit spreads and interest rates.

Another allocation of up to $150 million was awarded to Fir Tree SPAC Opportunities Separately Managed Account. The investment vehicle will focus on inefficient pricing in SPACs to generate risk adjusted returns with limited sensitivity to equity and credit markets.

Lastly, an add-on investment of $50 million will go to CKC Credit Opportunity in the emerging manager direct hedge fund managed account.

Aberdeen Asset Management is PRIM’s hedge fund consultant.

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