PE returns 17.7 pct for New Mexico Educational Retirement Board

  • New Mexico ERB nets 13.4 pct since inception
  • Growth equity returns 23.3 pct for pension
  • Pension has 9.6 pct allocation to PE

The New Mexico Educational Retirement Board’s (New Mexico ERB) private equity portfolio returned 17.7 percent for the fiscal year ended June 30, according to an October report obtained through a records request.

The $11.4 billion retirement system’s general partners distributed almost $76.6 million during the quarter ended June 30, and the PE portfolio’s net asset value increased by approximately $77.9 million, according to the report, which was prepared by consultant Top Tier Capital.

The recent surge boosted New Mexico ERB’s private equity returns by nearly a full percentage point, from 12.64 percent since inception as of March 31 to 13.4 percent as of June 30, according to pension documents. New Mexico ERB had a 9.6 percent allocation to the asset class as of June 30.

The retirement system distributed its private equity commitments across a wide range of strategies since it began investing in the asset class in 2006. The largest component of its exposure is dedicated to growth equity funds, which have also been the portfolio’s top-performing strategy.

Growth equity funds netted 23.3 percent for New Mexico ERB since inception, according to the report. Roughly a quarter of the retirement system’s private equity exposure is in growth equity strategies.

New Mexico ERB’s $230.4 million portfolio of private equity co-investments also performed well, netting 19.1 percent since inception.

Returns from New Mexico ERB’s portfolio of buyout funds, which account for 15.9 percent of its private equity exposure, were relatively weak by comparison. Buyouts netted 9.9 percent for the retirement system as of June 30, according to the report.

In addition to reviewing its second-quarter private equity performance, New Mexico ERB also approved a commitment of up to $75 million to Warburg Pincus Private Equity XII at its October 22 meeting, Deputy CIO Stephen Neel said in an email. Warburg Pincus has set a $12 billion target for the fund.

New Mexico ERB previously committed $75 million to Warburg Pincus’ last flagship vehicle, a 2012 vintage fund that netted 20.8 percent as of June 30, according to pension documents.

Action Item: Click here for New Mexico ERB’s most recent investment report:

New Mexico ERB - Strategic Breakdown Q2 2015, fiscal year ended June 30