State Investment Council meeting, 5/22/12
The internal rate of return on the 28 private equity investments made on behalf of the New Mexico State Investment Council (SIC) is at minus 4.4 percent — that’s an improvement from being down 18.2 percent but in a scorecard presented to members of the SIC on Tuesday (May 22), 19 of those investments are in negative territory and nine of them are posting double-digit losses that go all the way to minus 74.5 percent.
Since 2004, “performance is tracking to the benchmarks,” said Brian Birk of Sun Mountain Capital, the Santa Fe-based investment firm that manages the SIC’s Private Equity Investment Program, adding that the fund “is making encouraging progress” in the last seven years.
But SIC member Lee Rawson said the council “should keep a close eye” on the fund, pointing out that two-thirds of the individual funds have a negative internal rate of return (IRR).
Here’s the complete list of the scorecard presented to council members Tuesday, showing 19 investments with negative IRRs through the end of 2011, 8 with postive IRRs and one investment (EPIC Venture Fund IV, LLC) without an IRR posted. (Sorry, the chart is so large it bleeds across the page. You can click on the chart to view it unobstructed.)
Of the 19 investments in negative territory, four have been liquidated including one investment that had a 74.5 percent negative IRR and another that came in at minus 70 percent IRR.
The list does not include three investments that had been made directly with SIC money (a practice that has since been abandoned): Eclipse Aviation, that lost $19 million with $6 million in debt, TCI Medical that lost $7 million in equity, and Earthstone that received $11 million with the SIC still hoping to see a return on its investment.
In other news in the monthly SIC meeting, investment officer Steve Moise announced the net asset value of the council’s entire funds is up to $15.086 billion and that in the first quarter of this year, the Land Grant Permanent Fund finished first among its peers in the country and the Severance Tax Permanent Fund finished No. 3 among its peer group.
“It’s certainly something I am proud of,” Moise said. Council member Harold Lavender added that in the financial industry “people do pay attention” to results like that.
Later in the meeting, the council voted 6-3 to invest $75 million in a fund run by Global Infrastructure Partners after listening to a presentation from one of the firm’s partners, Jonathan Bram.
A private equity fund led by Credit Suisse and General Electric and with offices in New York City, London and Stamford, Conn., Global Infrastructure Partners owns or partly owns such properties as Gatwick Airport and Edinburgh Airport in the United Kingdom.
In one other bit of SIC news Tuesday, new council member Linda Eitzen was introduced. She’s an attorney from Albuquerque and was selected by Gov. Susana Martinez. The council is still one member short of its allotment of 11 public members with the recent resignation of Doug Brown.
