New Mexico Educational commits $40m to Marlin

The New Mexico Educational Retirement System has approved a commitment of up to $40 million to Marlin Equity Partners IV, a new relationship for the system.

Fund IV is targeting $1.6 billion and it's not clear if the vehicle has a hard-cap. Marlin focuses on corporate divestitures, turnarounds, growth equity and buy-and-build strategies, and targets investments in sectors including healthcare, technology, consumer, services and manufacturing.

“We thought they were the best available [in the distressed sector],” New Mexico chief investment officer Bob Jacksha told Private Equity International.

The $9.9 billion pension system’s private equity programme is still relatively young compared to other large US retirement systems. The pension fund has about $1.1 billion of commitments to roughly 35 private equity funds.

“It really started in 2007, so we’re still building out the programme, although we’re getting pretty far along,” Jacksha said. “We are trying to make a few meaningful commitments as we go forward and not build a private equity [portfolio] that has 120 relationships or something like that.”

New Mexico has a 10 percent target allocation to private equity and a 6.6 percent actual allocation, as of 31 March. The retirement system plans to invest between $225 million and $250 million to private equity in 2013.

Earlier this year, New Mexico committed $100 million to a separate account with BlackRock that will co-invest alongside private equity funds primarily in traditional buyout transactions but also in growth equity, private debt, distressed debt and mezzanine strategies.

Other recent New Mexico investments include a $40 million commitment to Ares Corporate Opportunities Fund,  $75 million to TPG Growth II, $40 million to W Capital Partners III and $75 million to Warburg Pincus Private Equity XI.

New Mexico’s private equity portfolio generated an 18.5 percent internal rate of return as of 30 September 2012. The pension’s private markets portfolio is split between 44 percent in buyouts, 15 percent in distressed, 11 percent each in secondaries and co-investments, 10 percent in mezzanine, 6 percent in growth equity and 3 percent in venture capital.