New Mexico Educational Retirement Board has expanded its infrastructure investment programme by adding First State Investments to its manager roster.
The US public sector pension fund approved an initial commitment of $40m (€34.4m) into First State’s Global Direct Infrastructure Fund.
Mark Canavan, senior portfolio manager at New Mexico, said: “First State has a good track record investing in infrastructure, a strong management team, and the fee structure on its commingled fund is attractive.”
The allocation would give the $11bn pension fund some diversification within its infrastructure portfolio, Canavan added.
He said: “Most of our existing real estate managers have a value-add strategy. We look at First State as more of a core infrastructure manager.”
The Global Direct Infrastructure Fund is open-ended, with roughly $1.2bn in assets under management. It aims for a 9% net internal rate of return.
Most of the capital will be invested in the markets of Australia, New Zealand, the UK and Europe. The fund can allocate up to 20% of its assets to North America. Sectors include power, transportation, utilities and water.
On top of the $40m initial investment, New Mexico said it could add another $10m to the First State fund. “We don’t want to invest in just one fund with a manager, but would prefer to make multiple commitments with the same manager,” said Canavan.
The pension fund’s infrastructure portfolio was valued at $331.1m at the end of March 2017. It had an additional $184.1m of unfunded commitments to the asset class.
First State did not respond to requests for comment.
