Exclusive: CalPERS picks StepStone as consultant

The New York-based investment firm will replace Meketa as the pension fund’s infrastructure board investment consultant beginning March 1, 2015.

The California Public Employees’ Retirement System (CalPERS) board of administration has voted in favour of StepStone Group to act as its new infrastructure board investment consultant, Joe DeAnda, CalPERS’ information officer for infrastructure investments, told Infrastructure Investor on Tuesday.

“The board has selected StepStone,” DeAnda said. “That is of course pending some final negotiations and contract issues, but the board did signal their intent to award the contract to them.”

StepStone will replace CalPERS’ current consultant and one of the three finalists – Meketa Investment Group – on March 1, 2015 when Meketa’s contract expires.

The pension fund had issued a Request for Proposals in April at the direction of the investment committee to solicit a consultant. The three finalists’ technical proposals were then scored by the investment staff based on, among other criteria, organisation and background, professional staff, strategy and policy analysis, and performance analysis and monitoring.

Meketa, which has served as CalPERS’ infra consultant since December 2009, had the highest technical score, while StepStone had the highest fee proposal score and was the lowest bidder.

The third finalist, Courtland Partners, scored the lowest in both the technical and fees category.

The final decision was made during a board meeting Monday when all three finalists were interviewed by the investment committee.

According to board meeting documents, “the consultant will provide independent review and recommendations on Strategy and Policy Analysis, Performance Analysis and Monitoring, and other Special Projects, as requested”.

StepStone Group, headquartered in New York, is a global private markets firm representing public and corporate pension funds as well as other institutional investors. Founded in 2007, the firm established a business unit dedicated to infrastructure and real assets in 2013. Its clients include the Pennsylvania State Employees’ Retirement System, the New York City Employees’ Retirement System and the New York Police Pension Fund.

With a portfolio of $290.5 billion, CalPERS is the largest public pension fund in the country. In July it increased its allocation to infrastructure to 3 percent from 2 percent previously. As of April 30, it had invested $1.16 billion in the asset class representing 0.5 percent of its portfolio.

Last month, the pension fund announced a $500 million strategic partnership with UBS and commitments to Morgan Stanley Infrastructure Partners II and UBS International Infrastructure Fund totaling $550 million.

Based in Sacramento, CalPERS administers health and retirement benefits on behalf of 3,089 public school, local agency and state employers. The institution counts more than 1.7 million members in its retirement system and more than 1.3 million in its health plans.