Minnesota State Board of Investment, St. Paul, approved hiring Fidelity Institutional Asset Management as an active emerging markets equity manager, as well as private equity, private credit and real assets commitments totaling up to $1 billion.
The board, which manages a total of $149.9 billion in state assets, including $97.6 billion in its combined fund of defined benefit plan assets, approved the investment actions at its Dec. 10 meeting, a webcast of the meeting showed.
First, the board’s approval of hiring FIAM was the result of a search conducted by investment staff as a result of two recent terminations of active emerging markets equity managers that created an overweight to passive managers within the emerging markets equity asset class, said Gary Martin, chair of the board’s investment advisory council, in the webcast. Martin did not provide a portfolio size for the new manager.
According to recent investment reports, the board recently terminated active emerging markets equity managers Neuberger Berman ($349 million in assets as of March 31) and Rock Creek Group ($329 million as of June 30) during 2024. The board materials do not provide reasons for terminations.
As of Sept. 30, the combined fund’s actual allocation to public equity was 50.9%; the target is 50%.
Within private equity, the board approved commitments of up to $400 million to KKR North America Fund XIV, a buyout fund managed by KKR & Co.; up to $125 million each to IK Small Cap IV Fund, a small-market buyout fund managed by IK Investment Partners, and buyout fund Nordic Capital Evolution II; and approved an additional commitment of up to $50 million to global diversified infrastructure fund Blackstone Energy Transition Partners IV.
The board originally approved a commitment of up to $150 million to the Blackstone fund in February.
Jill Schurtz, executive director and chief investment officer, said in an August interview with Pensions & Investments that investment staff is targeting $1 billion in climate-related investments over the next five years.
“Part of the reason we've selected that number, and again, trying to be pragmatic and think about this in the same way we do all allocations, we think the majority of these opportunity sets will live in the private markets portfolio,” Schurtz said at the time. “So when we think about that portfolio is roughly $22 billion, we think that targeting kind of a pacing of roughly $200 million a year is consistent with our overall pacing on private markets and keeps us within our risk tolerances.”
Within private credit, the board committed up to $200 million to HPS Strategic Investment Partners VI, a private credit fund managed by HPS Investment Partners, and within real assets, the board committed up to $125 million to value-added infrastructure fund EQT Infrastructure VI.
As of Sept. 30, the combined fund’s actual allocation to private markets was 23.9%; the target is 25%.
