By Muskan Arora
The $61B New Mexico State Investment Council
sees opportunities in value-add and opportunistic infrastructure and natural
resources within its real return portfolio.
At the recent SIC meeting, the council also
indicated considering a separately managed account for co-investments to “capture
additional deal flow.”
Currently, through its real return portfolio, the system participates in 5 c-investment vehicles, each of which are outperforming its primary fund.
Its pacing plan is earmarked at $1.04B in 2025, with a stable increasement each year until 2029 at $1.42B. And, through infrastructure, the pension plan will target digital, midstream/downstream, social, logistics, transport and utilities sectors, as stated in the recent meeting materials.
“With the increase in commitments due to
the assets increase, the real return portfolio may show a performance impact as
newer funds are in the early part of the 'J-Curve' which typically has low or
negative performance the first few years of a fund,” noted a presentation by Mercer, the plan's consultant.
The meeting materials also noted a strong performance quarter for real assets with returns of around 4%, mainly driven by the infrastructure sector. The net internal rate of return rose to 6.9% from 6.6% in Q2, with the real assets portfolio generating $1.5 billion in total gains. Investments within the RA portfolio are mostly focused on America, followed by Europe and Asia.
Most recently, the plan has allocated up to $200M to Oaktree POF VII, a buyout fund focused on investing in electric power, natural gas, water and similar businesses within Europe and North America. Other pension plans including the New York State Common Retirement Fund and Orange County Employees Retirement System are also invested in this fund.
Along with re-structuring its real return portfolio, the system made two commitments within its private equity sleeve, including an allocation of up to $75 Million to Invictus Growth Fund II, managed by Invictus Growth Management, a lower middle-market buyout firm. It also committed up to $125 Million to Atlas Capital Resources V, a buyout fund focused on investing in automotive components, construction, food processing, metal processing and fabrication, packaging, power generation, pulp and paper, as well as wood products and building materials.
The fund also plans to focus on building a portfolio of investments in companies across the cloud software, cybersecurity and fintech sectors.
