Mandate broadened, New Mexico can now go direct

The New Mexico Educational Retirement Board has approved direct co-investment in infrastructure. The newly minted provision will go into effect between the third and fourth quarter.

The $9.5 billion New Mexico Educational Retirement Board (NMERB) now has leeway to form partnerships and invest directly in infrastructure behind a recently approved revamp to its investment policy.

The contemporised policy should “go live” in the third or fourth quarter of 2012, Mark Canavan, real asset investment chief in Albuquerque, told Infrastructure Investor.

Currently the board, which began investing in infrastructure in 2008, has a 3.5 percent allocation to the asset class worth $330 million. The infrastructure allocation is half of its designated real assets portfolio.

Canavan joined NMERB in 2007, and campaigned for authorisation to begin investing in infrastructure, which he valued for its “defensive makeup”.

A year later, the board hired consultant Caledon Capital Management and made its debut infrastructure allocation, investing $50 million apiece with Alinda Capital Partners and Citi Infrastructure Investors.

Canavan praised Toronto-headquartered Caledon, which is co-headed by Asif Hussain, who ran Borealis, the infrastructure arm of the Ontario Municipal Employees Retirement System (OMERS).

“Asif has direct underwriting experience,” Canavan pointed out, noting Caledon boss David Rogers headed private equity for OMERS prior to founding Caledon.

OMERS, together with the $70 billion Alberta Investment Management Corporation and $155 billion the Canada Pension Plan Investment Board helped pioneer direct infrastructure investing in North America.

For its part, six-year-old Caledon, adviser to $3.5 billion, told Infrastructure Investor in March that direct investing was gaining popularity in the pension fund space.

Before he joined NMERB, Canavan was a portfolio manager for the New Mexico State Treasurer’s Office.