News & Analysis

New Mexico SIC mulls secondaries sale

The $14.5bn state endowment wants to pare down its private equity portfolio, which contains 150 funds from 80 GPs, to a size that its small staff can better manage. No word yet on the potential size of the sale.

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New Mexico State Investment Council is considering selling a portion of its private equity portfolio on the secondaries market to make the 22-year-old programme more manageable.

The $14.5 billion state endowment delayed action on the secondaries sale at its recent investment council meeting, choosing to wait until it hires a private equity advisor who can consult about the sale.

SIC has been searching for an advisor since last year, and the council could hire a firm this month, an SIC spokesperson told PEO.

SIC is simply looking to pare down the number of relationships in the private equity programme, which was launched in 1989, which includes 150 funds from 80 general partners, the spokesperson said. New Mexico SIC’s private equity programme has a $1.25 billion market value.

The endowment wouldn’t comment on exactly how much it would be selling, though one source said the sale would not reach the level of the California Public Employees’ Retirement System, which is selling about $800 million of limited partner stakes.

“We’re just trying to get our arms around it,” the spokesperson said, talking about the private equity portfolio. “There [are] too many GPs, too many funds. It’s hard for our staff to keep an eye on things, especially over the last 10 years, we’ve been pretty active.”

The private equity advisor SIC hires could look at the portfolio and decide that nothing needs to be sold, the spokesperson said.

SIC has a 10 percent target for private equity, and an actual allocation of about 8 to 9 percent.

US public pensions may be the most active sellers on the secondaries market in the first half of 2011 as many of them run up against legislative targets to the asset class. While 2010 was the year of the financial institutions as sellers on the market, this year US public pensions could keep the market active, one secondaries source told PEO.

CalPERS has put up about $800 million of LP stakes on the secondaries market recently, consisting heavily of mega-fund interests.