The New Mexico Educational Retirement Board is backing Kildare with $80m (€70.9m), committing to the manager’s European Partners II fund.
Mark Canavan, senior portfolio manager for real assets at New Mexico, said: “It’s our opinion there are still strong investment opportunities in Europe with distressed debt, which will be the investment focus of the fund.
“The market in Europe remains several years behind the US.”
New Mexico invested $50m in Kildare’s first fund, which has produced a net IRR of 14.6% since inception.
It has also committed another $75m to the opportunistic section of Kildare’s overall investment portfolio.
Kildare is targeting a $2bn capital raise for the fund, as reported earlier this month.
The manager, founded by former Lone Star Funds president and Sunderland football club owner Ellis Short, has a $2.5bn cap for the European Partners II fund, which has so far attracted commitments of around $1.5bn.
Partners II will invest some capital in the UK as well as Germany, the Netherlands, Portugal and Italy.
Most deals for the fund will be in the $100m-200m range.
The pension fund has also made a commitment of up to $25m to Realterm’s second fund, which invests in US industrial properties.
The planned total capital raise is $240m.
“We like the kind of real estate the fund will be investing in,” Canavan said. “There is very good tenant demand for this kind of product.
“It’s a very fragmented industry that has typically not attracted a great deal of institutional interest. One reason is that many of the transactions are quite small and in some cases can be $2m to $5m.”
One of the goals of the fund, Canavan said, was to accumulate a sizeable portfolio to be later sold to an institutional investor.
Realterm II will be looking to invest in existing assets, with a projected net IRR of around 15%.
