New Mexico Educational commits $80m

The $8.8bn pension, which will commit about $225m to private equity this year, made commitments to Black Diamond Capital Management and Strategic Value Partners.

The New Mexico Educational Retirement System, with about $8.8 billion in assets, made a big bet on distressed funds this month, committing $80 million to Black Diamond Capital Management and Strategic Value Partners.

The pension committed $40 million to BDCM Opportunity III, which is reportedly targeting $750 million and had raised $206 million as of last year, according to a filing with the US Securities and Exchange Commission.

New Mexico Educational also committed $40 million to Strategic Value Global Opportunities II. The target for the fund is unclear.

Distressed investments represent a preferred strategy for New Mexico Educational, according to Bob Jacksha, chief investment officer for the pension.

“It’s worked out well,” Jacksha said about the pension’s distressed investment portfolio. “We still think there are some opportunities out there.”
New Mexico Educational will meet its goal of committing $225 million to private equity funds this year, Jacksha said. The pension will try to spend a similar amount in 2011, he said.

The pension has a 10 percent target allocation to private equity. Launched in 2006, the portfolio is valued at about $314 million, Jacksha said.

Because of the relative youth of the pension’s private equity portfolio, New Mexico Educational has been getting more capital calls from managers than distributions coming in, but that was expected, Jacksha said.

“We have more than adequate liquidity to cover capital calls,” he told PEO.

The pension also has a 5 percent allocation to real estate, which has been split between exposure to a REIT index of public real estate assets and private real estate funds. The pension started to pare down its exposure to the REIT index in 2007 and 2008 and slowly increase its exposure to private real estate, Jacksha said.

New Mexico Educational will continue to minimise its exposure to the REIT index and build its holdings in private real estate, he said.