Maine invests heavily in infrastructure, natural resources

  • Infrastructure, mining, agriculture 75 pct of recent commitments
  • $12.3 bln system commits more than $520 mln to private markets
  • Maine PE portfolio netting 9.7 pct IRR since inception

Maine Public Employees Retirement Systemallocated the vast majority of its commitments to private market funds to strategies outside the traditional realm of leveraged buyouts, according to documents obtained via public-records request.

Maine committed $521.9 million to private market funds over the previous year, a pension document dated March 2 says. Roughly three-quarters of Maine’s aggregate commitments went to infrastructure, mining and agriculture funds.

The $12.3 billion retirement system’s commitments to traditional PE buyout strategies totaled just $95 million. Its lone commitment to real estate, $50 million, went to Kohlberg Kravis Roberts’s most recent Americas-focused real estate fund.

MainePERS’s recent activity reflects its allocation needs, CIO Andrew Sawyer told Buyouts in an email. At year end, Maine was below its target allocations for infrastructure and natural-resources strategies by 2.6 and 1.7 percentage points, respectively.

It was much closer to its 10 percent target for PE, in which it holds 9.2 percent of its assets.

“We do not tactically trade the fund. Of course the macro and micro factors are always relevant but not something we trade on,” Sawyer wrote. “None of our investments are tactical. You will not hear me say, ‘today is a good day to buy trees.’”

Roughly 15 percent of Maine’s natural-resources portfolio was in timber assets as of Sept. 30, according to pension documents.

A majority of Maine’s commitments over the past year went to funds that were oversubscribed. Seven of its 13 commitments to new funds were finalized at amounts for less than the board had approved.

The steepest cut to Maine’s preferred allocation was on EQT Infrastructure. The board approved a 135 million euro ($145 million) commitment and secured a 65 million euro allocation, pension documents show.

EQT held a final close on the fund’s 4 billion euro hard cap after less than six months of fundraising, a Feb. 23 news release said. In the release, EQT said it was committed to keeping the fund “appropriately sized” even as it was heavily oversubscribed.

As of Sept. 30, Maine’s PE portfolio netted a 9.7 percent internal rate of return since inception. Its infrastructure portfolio netted a 8.9 percent IRR and its natural-resources portfolio netted a 1.9 percent IRR.

Action Item: More about Maine’s retirement system: