Updated with correction.
The New Mexico State Investment Council tabled a proposal to reduce its expected annualized rate of return targets for its largest investment pool. Incorrect information appeared in an earlier version of this story that ran in the Oct. 28 P&I Daily.
New Mexico State Investment Council, Santa Fe, on Wednesday committed up to $160 million to five alternative investment funds.
The council committed up to $75 million in Sixth Street Growth Partners II and up to $25 million to a sidecar vehicle for the same fund, both managed by Sixth Street Partners.
The main fund is expected to make mezzanine loans to late-stage growth companies in growth sectors including enterprise software, financial technology, tech-enabled business and business services, and targets a gross return in the mid-to high teens, according to a memo from staff at the $35 billion sovereign wealth fund. The sidecar fund focuses on smaller, earlier-stage companies offers discounted fees and targets a slightly higher return.
Sixth Street is targeting $3 billion for the main fund and $500 million for the sidecar. The council has invested with Sixth Street in the past.
Separately, the council committed up to $45 million to Menlo Special Opportunities Fund III, a venture capital fund expected to invest in later-stage companies, including those in which the manager, Menlo Ventures, has previously invested and new investments. Menlo Special Opportunities Fund III has a $750 million target. The council invested a prior Menlo Ventures fund, committing $30 million to Menlo Ventures XV.
The council also committed up to $10 million to CerraCap Ventures III, an early stage venture capital fund focused on cybersecurity, enterprise artificial intelligence and health technology. CerraCap Ventures is in the early stages of raising the new fund, so the council will make an initial $5 million commitment with the potential to increase its commitment to $10 million, Chris Cassidy, an investment analysis with the sovereign wealth fund, told the council at the meeting. This is the council's first commitment with CerraCap.
The council also made an commitment of up to $5 million to KittyHawk Ventures Three, an early-stage venture capital fund managed by the emerging manager.
Also at Wednesday's meeting, the council tabled a proposal to reduce its annualized rate of return targets for its largest investment pool, the $24.5 billion Land Grant Permanent Fund to 6.5% from 7% and the $6.3 billion Severance Tax Permanent Fund to 5.75% from 6.75% to bring them in line with expected lower future returns.
