New Mexico SWF commits $75m to Lightyear Fund IV

The New Mexico State Investment Council had previously committed $40m to Fund III and $60m to Fund II.

The State of New Mexico State Investment Council (NMSIC) has approved a $75 million commitment to Lightyear Capital’s Lightyear Fund IV, the sovereign wealth fund confirmed.

At its 22 March investment council meeting, NMSIC held a vote to approve this commitment to Lightyear’s fourth fund, which launched earlier this year with an undisclosed target.

According to the firm’s 17 February filing with the US Securities and Exchange Commission, the minimum commitment amount to the fund is $250,000 and UBS Securities was its placement agent, which is set to receive $5 million in commission, the document said.

Lightyear raised about $2.5 billion through commitments to its first three funds, according to the NMSIC meeting document. The fourth fund will target mid-market financial services companies, specifically in asset management, banks, brokerage, financial technology, insurance and specialty finance, according to the document.

Previously, NMSIC had committed $40 million to Lightyear Fund III and $60 million to Lightyear Fund II, according to PEI Research & Analytics. Fund III closed in August 2012 on $854 million, beating its $800 million target, and Fund II closed on $850 million, above the $800 million target, according to PEI Research. Fund III had a net internal rate of return of 18.3 percent as of 30 June, according to the New Mexico Educational Retirement Board private equity performance review report. Fund II had a net IRR of 4.73 percent as of 30 June 2013, according to the Indiana Public Retirement System documents.

The latest fund will have a similar target size as that of Fund III, according to PEI Research.

Other investors in Fund III and II include Los Angeles County Employees’ Retirement Association, Constitution Capital Partners, Portfolio Advisors, Pacific Life Insurance Co., and Neuberger Berman Group, according to PEI Research.

Lightyear’s current portfolio includes wealth management firm Wealth Enhancement Group, healthcare account administrator Alegeus Technologies and real estate investment management firm Clarion Partners, according to the NMSIC document.

NMSIC manages $19.61 billion in assets, according to PEI Research. Its recent commitments to private equity include $100 million to Vista Equity Partners III in February, $10 million to New Mexico Catalyst Fund in January, and $100 million to Green Equity Investors VII in January, according to the NMSIC document.