Massachusetts Pension Reserves Investment Management Board, Boston, on Nov. 30 approved roughly $260 million in private equity commitments, lifting the $95.2 billion Pension Reserves Investment Trust fund's allocations to the asset class to $2.4 billion for the year.
The board unanimously backed a first-time commitment for PRIM of up to €100 million ($109 million) to BlackFin Capital Partners' €1.5 billion BlackFin Financial Services Fund IV.
The board also added the Paris-based private equity firm to the pension fund's board-approved bench of co-investment managers.
BlackFin focuses on investments in lower-middle-market asset-light financial services firms across Western Europe.
The PRIM board also approved a commitment of up to $150 million to American Securities Partners IX, a $7 billion buyout fund focused on industrial sector companies.
According to PRIM staff, the commitment becomes PRIM's fifth to New York-based private equity firm American Securities. The fund has also done two co-investments with the firm.
Michael McGirr, PRIM's director of private equity, told board members that the latest commitments bring the pension fund's combined private equity commitments for the year to $2.4 billion, within PRIM's 2023 target range of $2.2 billion and $3 billion.
While PRIM's private equity investment returns for the 12 months through Sept. 30, at 4.9%, made that market segment only the pension fund's fifth strongest, PRIM executives said for the three, five and 10 years through Sept. 30, returns were 20% or more, and more than double the returns of the next best performing asset class.
The board also voted to sanction a new investment approval process, giving the pension fund's executive director and chief investment officer, two roles currently held by Michael Trotsky, authority to make decisions between board meetings on general partner-led secondaries transactions.
PRIM staff explained that GP-led secondaries — when the general partner of a fund looks to sell some of its portfolio companies to another fund or a "continuation fund," a vehicle that provides more time for a GP to sell certain holdings — represent a growing proportion of exit activity in the industry.
Limited partners such as PRIM "are typically faced with making a quick decision (typically within 20 business days) to either sell their existing interests or roll them into a continuation fund" — with the latter option sometimes requiring modest additional capital contributions, according to board materials.
Against that backdrop, "Prim requires more flexibility to maximize value for existing assets being sold to secondary buyers," PRIM staff said.
