New Mexico cuts commitment to Sun Capital V

The pension will reduce its commitment to the $6bn fund raised in 2007 by the maximum allowed amount.

The New Mexico Public Employees’ Retirement Association has taken up Sun Capital Partners’ offer to cut its commitment to the firm’s fifth buyout fund, which Sun is reducing by up to $1 billion. The fund closed on $6 billion in 2007.

The pension board authorised reducing its original $20.5 million commitment “to the fullest extent possible”, according to pension board documents. Sun Capital offered LPs the chance to cut commitments by bewteen 16 percent and 33 percent, meaning New Mexico’s contribution to the fund could drop as low as $13.6 million.

“We think they’re a strong manager and GP with smaller fund sizes,” said a source with the pension.

New Mexico’s public employees’ pension has $10.2 billion in assets, and a target allocation to alternatives of 8 percent. The pension’s actual allocation is about 10.2 percent.

Like many large firms, Sun Capital had been working with its LPs to help with liquidity issues. Several big-name pensions helped build Sun Capital’s fifth fund, including the Ford Foundation, China Development Industrial Bank, New York State Teachers’ Retirement System and the University of California Regents Endowment Fund.

Other firms have shrunk their funds to ease pressure on LPs in the market downturn including TPG and Permira. TPG recently allowed LPs to reduce for the second time their commitments to its financial services fund, which originally closed on $6 billion. The fund is expected to shrink to $2.5 billion.