Over the two months in which Chicago Teachers’ Pension Fund had issued a request for proposals seeking a minority, woman-owned or disadvantaged business enterprise, it received only one response.
Chicago-based JLC Infrastructure, which fulfilled the requirements of having at least three years’ experience managing institutional capital and $500 million of assets under management, will, as a result, present to the board of trustees in May to win a $25 million mandate, a source told Infrastructure Investor. The RFP’s deadline was 25 February.
The source added that CTPF also approved a $25 million commitment to Brookfield Asset Management’s fourth flagship infrastructure fund. The commitment, which is half of what the pension fund committed to Brookfield Infrastructure Fund III, comes a few months after CTPF passed on Brookfield and Blackstone, citing workplace diversity as a factor in that decision. As a result, CTPF chose to allocate $35 million to Australia’s IFM Investors and $15 million to Ullico last June.
However, CTPF chief investment officer Angela Miller-May stressed at the time that “performance plays the most important role in investment decisions”. But, “the teachers are a diverse group and they want to do business with groups that feel the same way about diversity and inclusion,” she added.
Terms of Brookfield Infrastructure Fund IV include a 1.5 percent management fee (1.35 percent for early investors) and an 8 percent hurdle rate. Brookfield is targeting $17 billion and expects a first close in April, the source said. The Toronto-based firm did not respond to a request for comment.
The pension fund has made working with diverse firms a priority, allocating up to 35 percent of its funds to such managers, according to a report from London-based think tank New Financial.
CTPF declined to comment for this story.
According to David Cibrian, chief executive of American Triple I Partners, a minority-owned infrastructure firm that launched last month, both governments and public pension funds are using inclusion requirements when procuring projects or making investments.
“They’re creating an environment where there’s a need to have minority or women-owned firms exposed to the same level of sophisticated and complex transactions that the larger firms have traditionally been exposed to, and this is one way to do it,” Cibrian said.
He added that diversity mandates are becoming increasingly common, but there is still a small number of firms in the market that can meet them. A 2017 study released by the US Government Accountability Office found that minority- and women-owned asset managers represent less than 1 percent of the $70 trillion of US assets under management.
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