Firms & Funds

New Mexico ERB re-ups to Tenex and Ares

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AppleMark
  • New Mexico ERB commits $90 mln to PE
  • Pension joins New Mexico SIC as an LP in Ares V
  • Also re-ups $50 mln to Tenex’s second fund

The New Mexico Educational Retirement Board committed $90 million to private equity at its Feb. 25 meeting, wrote Chief Investment Officer Bob Jacksha in an email.

The $11.1 billion retirement system allocated $50 million to Tenex Capital Partners II and $40 million to Ares Management‘s new flagship private equity fund, Jacksha wrote. Both commitments are subject to New Mexico ERB staff’s negotiation of final terms.

Tenex Capital Management set a $600 million target and a $750 million hard cap for Fund II, which will continue the firm’s strategy of acquiring companies with “operational distress,” New Jersey Division of Investment staff wrote in a memo. The firm’s debut fund, a 2011 vintage, was netting a 16.1 percent internal rate of return and 1.4x multiple as of Sept. 30, according to New Jersey.

In February, Buyouts reported Tenex split its general partner commitment to the fund evenly between a cash contribution and a management fee waiver. Those structures became less common over the last few years as regulatory scrutiny of the practice intensified.

New Mexico also re-upped $40 million to Ares Corporate Opportunities Fund V, which is targeting $6.5 billion for traditional buyouts and distressed debt investments. In January, Ares co-founder Bennett Rosenthal said the firm would likely direct more of its efforts toward distressed debt deals in the coming months to account for the economic slowdown.

Ares V has been popular among pension LPs. The Los Angeles Fire and Police Pensions, State of Wisconsin Investment Board, and Nebraska Investment Council approved commitments to the fund in recent months. The New Mexico State Investment Council, the state’s sovereign wealth fund, is also a Fund V LP.

The firm’s previous flagship fund was netting a 14.3 percent internal rate of return as of June 30, according to New Mexico ERB documents.

New Mexico ERB had a 10 percent allocation to private equity at year end, one percentage point short of its target. As of June 30, the portfolio netted a 13.39 percent internal rate of return since inception, according to a New Mexico ERB report.

Action Item: For New Mexico ERB’s most recent private equity report, visit http://bit.ly/1TMMbCt