New Mexico Educational Retirement Board has terminated several recommended commitments to private equity funds after an extensive review of its holdings in the wake of its firing of scandal-plagued private equity advisor Aldus Equity.
The pension, with assets of $7.6 billion, pulled back on recommended commitments of $30 million each to Sevin Rosen Fund X, a venture fund seeking $300 million, and Lee Equity Partners Fund, targeting $2.5 billion. The pension also terminated $70 million of a $75 million commitment to Erasmus Co-Investment, a partnership the pension had with Aldus.
New Mexico Educational also withdrew a recommended $20 million commitment to NGP Energy Technology Partners II, which closed on $348 million earlier this month, exceeding its $300 million target. In that case, the pension and the firm couldn’t agree on certain non-economic terms, according to Bob Jacksha, the pension’s chief investment officer.
New Mexico Educational’s long-term target to private equity remains at 10 percent, Jacksha said.
The pull-back from recommended commitments was about “how to pace the programme going forward” and did not reflect any problems with the actual funds, Jacksha said.
New Mexico Educational anticipates spending $225 million on private equity investments in 2009, and so far has committed $165 million. The pension splits its private equity investing between venture and growth capital, buyouts, distressed, secondaries, energy and co-investments.
Aldus has been charged civilly by the US Securities and Exchange Commission for its alleged role in a pension kick-back scandal involving the New York State Common Retirement Fund. Aldus allegedly paid illegal fees to a former New York political operative, Henry Morris, and the New York pension’s former chief investment officer, David Loglisci.
Aldus’ founder, Saul Meyer, was also criminally charged by New York Attorney General Andrew Cuomo for his alleged role in the scandal.
New Mexico Educational, as well as the New Mexico State Investment Council, which manages the state’s $11.8 billion oil and gas endowment, fired Aldus after the firm was charged and commenced reviews of their investment portfolios.
New Mexico SIC is still in the processing of reviewing commitments recommended by Aldus, and is considering whether to pull back on recommended commitments to Landmark Equity Partners, Newstone Capital Partners II, VSS Structured Capital Partners II and Ares Corporate Opportunity Fund III.