Research

LP Scorecard: Massachusetts PE portfolio continues to outperform peers

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private equity, pension fund
  • Massachusetts PRIM strong in top-10 pension analysis
  • Highest net IRR in two of three quartiles
  • Permira Ventures, Union Square Ventures funds stand out

Massachusetts Pension Reserves Investment Management for the most part ranked highest in terms of investment multiple and net IRR, compared with nine of the largest U.S. pension systems, a Buyouts analysis of state documents shows.

Massachusetts PRIM achieved the highest net IRR at every quartile except the bottom, where it ranked second to Texas County & District Retirement System. Its portfolio generated a 20.77 percent top-quartile net IRR, 13.28 percent median, and 7.07 bottom-quartile. The pension fund also ranked first in every quartile for investment multiple (bottom:1.3x, median: 1.6x, top: 2x).

The 10 pensions chosen for this analysis include some of the largest in the U.S., including California Public Employees’ Retirement System, Los Angeles City Employees’ Retirement System and New York City Employees’ Retirement System. (See full rankings in accompanying table.)

Each system chosen has a portfolio consisting of more than 100 funds. To avoid the j-curve effect, Buyouts removed funds of vintage year 2013 from this analysis.

Funds from Permira Ventures and Union Square Ventures spearheaded the strong returns for Massachusetts PRIM.

Permira Ventures’ 1997 vintage European Fund, an international buyouts fund, had the top IRR of any fund in the Massachusetts PRIM portfolio (73.54 percent). Union Square Ventures had two funds in the top five, with its 2004 vintage having the second highest IRR (67.6 percent) and its 2008 vintage Opportunity Fund having the fourth highest (60.6).

In terms of investment multiple, again Union Square Ventures led the way for Massachusetts PRIM. Three of Union Square’s funds were in the top 10 for Massachusetts, with its 2004 vintage claiming the top spot (12.4x), its 2008 vintage taking fourth (3.6x), and its Opportunity Fund ranking eighth (3.2x).

All told, as of Dec. 31, Massachusetts PRIM had about $10.8 billion committed to 194 active funds (excluding funds vintage year 2013 and younger). The pension fund’s general partners have drawn down $10.4 billion and returned $12.3 billion in distributions.

FinalMassTable

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