Public Employees Retirement Association (PERA) of New Mexico is backing a European infrastructure fund as part of plans to diversify its real assets portfolio and reduce exposure to North America.
The $16.66bn (€14.5bn) pension fund said in a board meeting document that it intends to approve a €60m commitment to Ardian’s Infrastructure Fund V.
The fund is targeting a total equity raise of €5.5bn and New Mexico PERA says expected net returns are in the range of 10% to 13%, with a 6% to 7% recurring cash flow yield per annum.
It will target core assets, including utilities, roads, airports and telecommunications, in OECD European markets.
According to New Mexico PERA, its existing real asset portfolio, which also includes real estate, is too exposed to North America and the plan is to alleviate this risk by investing more capital in other regions.
At the end of June 2018, real assets accounted for $3.14bn or 20.4% of the pension fund’s total assets.