New Mexico chooses Caledon as infra consultant

The New Mexico Educational Retirement Board, which made its first infrastructure commitments in 2008, received 10 responses for the consultant position. The $9.5bn pension is looking to pursue investments that are "more sophisticated than just buying funds", according to an investment officer.

The New Mexico Educational Retirement Board (NMERB) has selected Toronto-based firm Caledon Capital Management as an infrastructure consultant.

A request for proposals (RFP) issued in March elicited interest from 10 potential consultants, according to Mark Canavan, investment officer for real assets at NMERB. Canavan said the pension fund, which manages an $9.5 billion portfolio, was looking to find a consultant with knowledge of various infrastructure sectors.

Caledon focuses on advising small and mid-size pensions and endowments, according to the firm's website. The firm was founded in 2006 by David Rogers, the former head of Ontario Municipal Employees Retirement System (OMERS) private equity team. Rogers also served on the Board of Directors of Borealis, OMERS’ infrastructure investment arm. Caledon’s partners have also held positions at Access Capital, and in the Infrastructure Group of the Abu Dhabi Investment Authority, according to the website.

The selection of the consultant was announced at NMERB's investment meeting on July 14, according to the meeting agenda.

Infrastructure accounts for half of NMERB's real assets allocation, which jumped from 5 percent to 7 percent last year, according to Canavan. But he said that the hiring of the consultant resulted more from a need to keep up with market changes than to address an increased allocation to infrastructure.

“When we first created the infrastructure allocation, infrastructure was very new,” Canavan said. He said NMERB wanted a consultant to help the pension analyse changes that had occurred in the market in recent years and to help the pension in “polling what's out in the market” as well as finding “who the viable players are”.

He also said that NMERB is looking for investments that are “little bit more advanced or a little more sophisticated than just buying funds”.

“We'd  also like to be going into a more direct platform. If not direct then co-investment or buying secondary positions,” Canavan said.

The RFP for the infrastructure consultant position required candidates to have experience with direct infrastructure investments, Canavan said, though he cautioned that NMERB might not be considering direct investments due to “scaling” issues as well as concerns about managing and operating assets.

“If you have people who have a tremendous amount of direct investing experience, then you have someone who is exceptionally well qualified to do co-investing or to pick a fund manager,” Canavan said.

Canavan said NMERB is currently considering commitments to two infrastructure funds, but declined to specify which funds.

NMERB made its first infrastructure investments in 2008, when the pension committed to Alinda Capital Partners' second fund and to Citi Infrastructure Partners. NMERB has committed $50 million to each of those funds, according to the pension's website. NMERB has also committed $55 million to Alterna Capital Partners, a private investment firm focused on transportation, energy and industrials.