New Mexico State Investment Council, Santa Fe, committed $300 million to Ares Pathfinder II Fund, a private credit fund managed by Ares Management, and another total of up to $98 million to three private equity funds for its New Mexico private equity portfolio, said Charles Wollmann, spokesman for the $42.5 billion endowments, in an email.
Ares Pathfinder II, which will target collateralized investments in assets ranging from loans and leases to royalties and fees, has a $5 billion fundraising target. The council has invested with Ares in the past, including committing $75 million to Ares European Property Enhancement Partners III in 2021.
The council at its March 28 meeting also committed a total of up to $35 million to two funds of early stage venture capital firm Playground Global: up to $25 million to Playground Ventures III and up to $10 million to Playground Leader Fund.
New Mexico SIC also committed up to $63 million to Lux Ventures VIII, a multistage venture capital fund aiming to invest in companies in the life sciences, physical sciences, and computational sciences sectors. The fund is managed by Lux Capital Management.
The council has not invested with either manager in the past.
Separately, the council restructured its $10.8 billion fixed-income portfolio, reducing its exposure to hedge funds by $1.3 billion and doubling its private debt pacing to $1.6 billion per year.
Capital redeemed from hedge funds will be reinvested in the private markets, according to agenda materials for the council's meeting Tuesday. The staff estimated that distributions will be available periodically over the next 12 to 36 months. The council is retaining $416 million in hedge funds, including $293 million in Garda Fixed Income Relative Value Opportunity Fund (Onshore) and $122 million in OWS Credit Opportunity Fund LP - Class B.
The council is reducing its hedge fund portfolio because it is not a good fit for the council's fixed-income portfolio in that the council does not need the liquidity hedge funds offer, hedge funds tend to be expensive relative to private credit, private credit tends to have better investor and manager alignment, and private credit funds are more transparent, among other reasons, a staff report to the council said.
