CalPERS charts steady rise of infra funds

The California Public Employees' Retirement System has had its busiest year yet with regard to vetting infrastructure opportunities, as measured by the number of investment proposals the $218.9 billion pension has screened.

Year-to-date, CalPERS has screened 77 infrastructure investment proposals, according to an activity report presented by chief investment officer Joseph Dear at today’s investment committee meeting in Long Beach.

The number highlights the growing number of funds targeting the infrastructure asset class. At last count, there were at least 111 infrastructure funds in the market globally, according to fundraising database InfrastructureConnect.

Seventy-seven is also the largest number of infrastructure proposals CalPERs has screened in any single year since it created its inflation-linked asset class, which includes infrastructure and is targeted at 5 percent of its portfolio.

The inflation-linked asset class was created in 2007 and has achieved an annualised return since inception of -0.8 percent, according to Dear’s report.

In 2007, CalPERS screened only 12 infrastructure investment proposals, compared with 57 in 2008 and 52 in 2009.

As the number of proposals screened has gone up, the number of infrastructure investments that CalPERS has passed on has also risen. Of the 77 proposals screened this year, 70 have been declined or referred or failed to materialise, according to Dear’s report. And only two have resulted in due diligence reviews.

In 2009, CalPERS conducted due diligence reviews on four investments, according to the report. Its largest infrastructure investment was a $300 million commitment to Alinda Capital Partners’ second infrastructure fund.

The Alinda investment is now paying money back to CalPERS. The pension said it received two back-to-back distributions from Alinda's second fund in August: one for $1.35 million on 6 August and another for $1.48 million on 13 August.

Alinda’s first fund also paid CalPERS a distribution of just under $100,000 on 12 August, according to a transaction report submitted in today’s investment committee meeting.