New Mexico State Investment Council is investing $100m (€91.8m) in Macquarie’s latest infrastructure fund as it looks to generate double-digit returns from the asset class.
According to the North American sovereign wealth fund, Macquarie is seeking to raise $3.5bn for Infrastructure Partners IV and generate returns of up to 12%.
The core-plus/value-added fund will focus on the US infrastructure market.
NM State Investment Council has been looking specifically at infrastructure funds that can deliver higher returns as part of its real-return allocation.
Vince Smith, deputy state investment officer for NM State Investment Council, said: “Partners IV is targeting net IRRs of 10% to 12%. This is much higher than core infrastructure funds which are typically 7% to 9%.
“The targeted level of return for our real asset portfolio is 7.23%.”
Macquarie, which did not comment, will focus on the US infrastructure market for the fund, although it can invest up to 10% in other countries in the Americas, including Canada.
According to a New Mexico State board meeting document, Macquarie estimates that $3.3trn of infrastructure investment will be needed in the US between now and 2025, with an anticipated shortfall of $1.4trn.
Partners IV will focus on four areas: utilities/power and midstream; transportation; waste management and communication. It is expected to be acquire between seven and 10 assets.
The investment in Partners IV means NM State Investment Council has reached its target allocation to infrastructure.
The institutional investor has invested in the asset class with Macquarie in the past. In 2014, it committed $60m to the Macquarie Infrastructure Asia fund.