New Mexico State Investment Council, Santa Fe, is redeeming investments from two non-core fixed-income separate accounts.
The council is redeeming its entire $112 million investment in Bain Capital Credit Rio Grande FMC, a credit separately managed account, and is seeking a partial redemption of $100 million from another credit separately managed account, Angelo Gordon Rio Grande FMC.
At its Nov. 24 meeting, the council voted to seek a full redemption of its Bain customized separately managed account set up in 2014 as a flexible multistrategy credit mandate investing in bank loans, high yield bonds, residential mortgage-backed securities and collateralized loan obligations as well as equity. Aksia, the council's fixed-income consultant, recommended the redemption because its $28.3 billion in endowments overseen by the council have exposure to those assets in the rest of the $3.6 billion non-core fixed-income portfolio, "and we believe that higher quality opportunities exist," an Aksia memo said.
"Additionally, the target return of LIBOR plus 3%-4% net per annum (as stated by the manager) has not been met over the life of the investment," the memo said.
"The manager didn't capture returns as expected," said Robert "Vince" Smith, CIO and deputy state investment officer, during the council meeting.
Bain Capital executives declined comment.
The council is also redeeming a portion of $221.5 million invested in the Angelo Gordon separate account, spokesman Charles Wollmann said in an email.
The council is seeking a partial redemption because "there is potential value in maintaining a partial position given the conviction in the strategy employed," according to summary notes from the council investment committee's Nov. 12 meeting.
Separately, the council adopted a New Mexico renewable energy investment strategic plan, which is designed to be "a road map for the council ... to make prudent investments that can strengthen the renewable energy industry in New Mexico," according to the executive summary of the strategic plan.
The share of New Mexico's energy from renewable sources is expected to exceed 50% by 2023, after growing to 25% in 2019 from 5% in 2010, the executive summary said. The plan was created at the request of the New Mexico House of Representatives based on that body's determination that the New Mexico renewable energy industry is a growth industry and that supporting and promoting it will benefit the state, the summary said.
New Mexico renewable energy investments are expected to be made primarily from the endowments' real assets portfolio, fixed income and New Mexico private equity.