CalPERS, UBS launch $500m infra partnership(2)

The California public pension fund and UBS Global Asset Management will jointly pursue core infra opportunities through a strategic partnership.

The California Public Employees’ Retirement System (CalPERS), the largest public pension fund in the US, and UBS Global Asset Management (Americas) have committed a total of $500 million to a strategic partnership that will allow both parties to jointly pursue infrastructure investment opportunities across core OECD markets, UBS said in a statement. CalPERS has committed $485 million, while UBS has committed $15 million.

Golden State Matterhorn (GSM), as the joint venture is known, was established on June 30 and is actively considering infrastructure investment opportunities aiming to make two to four investments over the next few years, UBS said without providing any more details.

UBS will be the managing member of GSM and will consult with Infrastructure Asset Management (IAM), a division within UBS Global Asset Management’s Infrastructure and Private Equity business unit that originates and manages direct investments in infrastructure globally on behalf of its institutional clients.

The move appears to be in line with CalPERS’ decision earlier this year to up its allocation target in infrastructure to 3 percent from 2 percent previously. The new target allocation went into effect on July 1.

“We are pleased to add UBS Global Asset Management to our roster of preferred partners as we expand our access to infrastructure assets across the globe,” CalPERS’ senior portfolio manager Randall Mullen said.

It was unclear whether UBS’ $15 million commitment was being made through UBS International Infrastructure Fund II – a vehicle the asset manager is in the process of raising and which targets direct investments in transportation, utilities, energy and social infrastructure assets in OECD countries.

In July, Infrastructure Investor reported that UBS had only managed to raise a confirmed $379.9 million out of the $2 billion it is targeting, despite marketing the fund to investors for at least 25 months.

In the statement, Paul Moy, global head of UBS Global Asset Management’s Infrastructure and Private Equity business, said: “We are delighted to be partnering with CalPERS, one of the world’s pre-eminent institutional investors, for this important mandate.”

“We share a common view of good infrastructure investment and the value-add and risk management activities associated with these investments,” he added. “We are now working together to put this view into practice.”

UBS Global Asset Management (Americas) is a member of the UBS Global Asset Management division of UBS. Its Infrastructure and Private Equity business manages more than $14 billion in assets worldwide. The Infrastructure Asset Management division that is part of the Infrastructure and Private Equity business manages direct investments that include ownership stakes in wind farms, power stations and a waste management company in Europe, the US and Australia.

CalPERS, which is based in Sacramento, administers health and retirement benefits on behalf of 3,089 public school, local agency and state employers. Members number more than 1.7 million in the CalPERS retirement system and more than 1.3 million in its health plans.

As of April 30, 2014, CalPERS had invested $1.6 billion in infrastructure, representing 0.5 percent of its $290.5 billion portfolio, according to information available on the pension fund’s website.