New Mexico Catalyst Fund eyes early final close

The seed- and early-stage fund of funds managed by Sun Mountain Capital and backed by the New Mexico sovereign wealth fund may also beat its target by $5m to $10m.

The New Mexico Catalyst Fund, a fund of funds focused on backing seed- and early-stage investments in New Mexico, is nearing a final close and is expected to beat its $40 million target, Private Equity International has learned.

The fund is likely to reach $45 million or $50 million for the final close, which may come sooner than the original timeline of the end of the second quarter this year, the New Mexico State Investment Council (SIC) spokesman told PEI.

SIC is one of the limited partners in the Catalyst Fund, with a $10 million commitment that was approved on 12 January 2016, according to the sovereign wealth fund’s meeting materials from April.

He said the fund, which has raised $19 million so far – $10 million from SIC; $5 million from the New Mexico Economic Development Department (NMEDD) and $4 million from unspecified private institutional investors – may close as early as during the first quarter.

The fund held a first close on $15 million in May, following commitments from SIC and NMEDD, SIC’s 24 May meeting materials showed.

The fund was set up in January 2016 by SIC’s investment advisor Sun Mountain Capital to boost venture capital investments in the desert state, according to a meeting material for SIC’s 28 February meeting.

It will make commitments to eight to 10 seed- and early-stage investment vehicles based in New Mexico, and those vehicles are required to match the amount of capital raised by the Catalyst Fund itself. This means the Catalyst Fund is looking for $20 million in commitments, while the other $20 million to meet its target would come from these vehicles backed by the fund, the SIC spokesman said.

But these investment vehicles may commit more than the matching amount, possibly pushing the final close amount to $45 million or $50 million, he added.

These vehicles will target about 50 companies over the next five years, the SIC document showed.

New Mexico-based Sun Mountain's website indicates the Catalyst Fund will make ranging from $1.5 million to $2 million. The SIC document showed that three funds have received commitments so far, and four others are in the due diligence phase, though the funds were not identified.

Sun Mountain was not available to comment.

According to a Securities and Exchange Commission filing from July, the Catalyst Fund is led by Sun Mountain managing partner Brian Birk and partners Sally Corning and Lee Rand.