New Mexico backs in-demand Affinity V for investments in Asia

  • Fund IV netting “lights out” returns, says New Mexico spokesman
  • Fund V targeting $5 bln
  • New Mexico SIC PE portfolio valued at $1.8 bln

New Mexico State Investment Councilapproved a $100 million commitment to Affinity Equity Partners’ latest flagship fund at its Oct. 24 meeting.

Affinity set a $5 billion target for its new fund, Affinity Asia Pacific Fund V, and the vehicle will likely be oversubscribed, council spokesman Charles Wollmann said in an email.

New Mexico previously committed $75 million to Fund IV, whose returns for the state sovereign-wealth fund have been “lights out,” Wollmann said.

The Council’s commitment to Fund IV, which closed on $3.8 billion in 2014, was netting a 29 percent internal rate of return and 1.7x multiple to date. Fund IV was a top-quartile fund in terms of both IRR and investment multiple, a report from consultant Pavilion shows.

Affinity specializes in upper-mid-market buyouts in Korea, Australia, New Zealand, Southeast Asia and China. Fund III and IV’s portfolios include Burger King Korea, Jinmailang Beverage of China and Loen Entertainment, a Korean online music platform and production company.

The Affinity team, led by Chairman and Managing Partner Kok-Yew Tang, spun out of UBS Capital Asia in 2004 and has since swelled to 41 investment professionals across six offices in Beijing, Hong Kong, Jakarta, Seoul, Singapore and Sydney.

While some on the Council expressed concern with bulking up its exposure to Asian assets, given the assorted geopolitical risks in the region, the majority believed Affinity would still be a strong manager for New Mexico’s $1.8 billion private equity program, Wollmann said.

The State Investment Council, which manages the assets of New Mexico’s land grant fund and severance tax fund, held 8 percent of its assets in PE as of Aug. 31, according to a recent investment report. The portfolio has delivered a 10-year annualized return of 7.59 percent.

Action Item: Read New Mexico’s documents on Affinity: