New Mexico SIC’s private equity portfolio in five charts

On Tuesday, the $24bn sovereign wealth fund will vote on a subscription to a portfolio management service to aid due diligence and portfolio monitoring across private equity, real return and real estate.

New Mexico State Investment Council, which manages the state’s $24 billion permanent endowment, is considering a subscription to the Burgiss alternative investment database and analytics platform “to enhance due diligence and portfolio monitoring abilities” across its private equity, real return and real estate portfolios.

According to documents prepared for a 28 August meeting, the projected cost of the service is $200,100 per 12-month subscription, which is equivalent to 0.002 percent of New Mexico SIC’s roughly $8.6 billion allocation to those asset classes.

“The support tools will help answer questions about performance, cashflow measures, risk-return comparisons, portfolio exposures and more,” New Mexico SIC staff wrote in the documents. “An additional benefit is the attainment of a systematic solution toward maintaining independent data and reporting, helping to ensure continuity and consistency over time as service providers and personnel evolve.”

The documents note that other prominent sovereign wealth funds investing in private markets, including Alaska Permanent Fund, Abu Dhabi Investment Authority, Canada Pension Plan Investment Board and GIC, use the Burgiss platform, as do pension funds including Public Employees Retirement Association of New Mexico and Employees Retirement System of Texas.

At the 28 August meeting, New Mexico SIC is also set to vote on a commitment of up to $100 million to Hellman & Friedman‘s ninth flagship private equity fund, which is in market with a target and hard-cap of $15 billion. H&F is expected to make a further $1 billion GP commitment to the fund.

The firm and New Mexico SIC’s investment advisor Pavilion presented the fund at an investment committee meeting on 9 August. At the meeting, concerns raised about the fund included a lack of preferred return hurdle within the fee structure and a roughly $4 billion increase in fund size from its predecessor.

According to summary notes from that meeting, New Mexico SIC staff and Pavilion believe these risks to be “sufficiently mitigated”.

“H&F’s return history has consistently generated performance that exceeds a typical preferred return hurdle of 7-8 percent, and the firm has fostered alignment in multiple ways,” the notes read. “These include the firm’s focus on a single product and strategy, employee ownership of 100 percent of the GP and carried interest, no fees charged to portfolio companies, 100 percent fee offset and meaningful GP commitment.”

New Mexico SIC has a 12 percent long-term target for private equity. Here’s how the overall private equity portfolio shapes up: