New Mexico State Investment Council, Santa Fe, invested $70 million in relative-value fixed-income hedge fund Garda Fixed Income Relative Value Opportunity Fund and commited up to $7.5 million to venture capital lending fund Trinity Capital Fund III, said Charles Wollmann, spokesman for the $20.6 billion endowments.
Garda Fixed Income Relative Value Opportunity Fund is managed by Garda Capital Partners. Garda is the first new manager the council has hired since it began restructuring its $1 billion absolute-return portfolio, which formerly had a fund-of-funds structure, Mr. Wollmann said.
Absolute-return consultant Aksia assisted.
The council plans to make its commitment to Trinity Capital Investment's latest fund in stages. It is committing $5 million now and is expected to commit another $2.5 million a year from now. Trinity is targeting $75 million for its latest fund. The fund has a small business investment company debenture license from the Small Business Administration and will use SBIC debt to provide venture capital loans. Private equity consultant Sun Mountain Capital assisted.
Separately, the council plans to search for public equity factor-based managers for its $5.7 billion public equity portfolio. The invitation-only process will be launched by RVK, the council's general investment consultant. Currently, 16.5% of the public equity portfolio is allocated to smart beta, which could increase to 45% of the portfolio, according to a staff report for the council's meeting earlier this week.
In other action, the council hired Sun Mountain Capital to liquidate a portfolio of private securities previously distributed to the council by its private equity managers. An increasing number of funds in the council's private equity portfolio are coming to the end of their life and are distributing illiquid securities in privately held companies. Private equity general partners distribute securities when the general partner is unable to liquidate the fund's portfolio companies by the end of the fund's life, said a staff memo for the same meeting. Part of Sun Mountain's duties will be to determine the size and scope of the council's portfolio of private securities in former private equity portfolio companies and sell them.
And the council approved a $4.9 million settlement with Eastern Real Estate Development LLC, formerly known as Northstar SIC Holdings, which was a $90.3 million real estate joint venture partner with the council, according to agenda materials. Mr. Wollmann declined to provide further details. However, according to minutes from earlier council meetings, the council entered into the joint venture in 2005, eventually investing $55 million. According to a spreadsheet released by the council as part of a pay-to-play investigation, Northstar's placement agent was Marc Correra. The council is suing Mr. Correra for alleged pay-to-play losses. Mr. Correra filed for bankruptcy in May.