Following recommendations from its investment staff and external consultant, the New Mexico State Investment Council (NMSIC) is set to approve a $75 million commitment to Brookfield Infrastructure Fund III (BIF III), the latest vehicle being raised by Toronto-based Brookfield Infrastructure Partners.
The proposed commitment is a follow-on investment, albeit slightly lower than the $100 million NMSIC invested in BIF II.
“Staff considers Brookfield to be one of the strongest infrastructure managers in the market and compares very favourably to other alternatives across a broad range of considerations,” NMSIC said in meeting materials.
Aiming to raise $10 billion for BIF III, the Canadian fund manager intends to continue the investment strategies followed by BIF I and II. Both vehicles have a mandate to invest in the Americas, Europe and Australasia and focus on the transportation, renewables, utilities and energy sectors.
The Townsend Group, NMSIC's consultant, cited Brookfield's consistent track record, ability to execute complex transactions and diversification as some of the key advantages of BIF III.
In addition to investing in BIF II, the New Mexico permanent endowment had also committed $75 million to Global Infrastructure Partners ' (GIP) second infrastructure fund, which closed on $8.25 billion in October 2012, making it the largest infrastructure fund ever raised.
A New York-based infrastructure fund manager, GIP is also in the process of raising its third infrastructure fund , which has a target of $12.5 billion and a hard cap of $15 billion.
Infrastructure falls under NMSIC's real assets portfolio, which in addition to infrastructure includes agriculture, commodities, energy and timber. The endowment has set a target allocation of 9 percent for its real assets portfolio, and a 0-40 percent allocation for infrastructure within real assets. As of September 30, 2015, NMSIC had approved commitments of $440 million to infrastructure, representing 24.9 percent of its real assets portfolio.
NMSIC's commitment comes less than two weeks since the Maine Public Employees' Retirement System (MainePERS) approved a commitment of up to $150 million each to BIF III and GIP III. The $12.6 billion public pension fund had previously invested $100 million and $75 million in both fund managers' sophomore funds.