Exclusive: NYCRS commits $350m to GIP III

The $154bn pension fund has made its largest infra commitment to date by investing with Global Infrastructure Partners for the first time.

The New York City Retirement System (NYCRS), which comprises five public pension funds, has committed $350 million to Global Infrastructure Partners III, Infrastructure Investor has learned and a spokesperson for the pension fund has confirmed.

The commitment marks NYCRS’ largest infrastructure investment to date and a new relationship with New York-based infrastructure fund manager Global Infrastructure Partners (GIP).

As of February, GIP had collected $7.7 billion for its latest vehicle, which has a target of $12.5 billion and a hard cap of $15 billion.

GIP III will most likely have a similar remit to its predecessor, providing institutional investors with exposure to a global and diversified portfolio. The third fund will also aim to continue the investment theme of forming investment partnerships with large corporations, now a well-established feature of the firm's second fund. GIP II, which closed on $8.25 billion in October 2012 is the largest infrastructure fund ever raised.

Excluding this latest commitment, NYCRS has so far allocated a little over $1 billion to infrastructure, a programme it launched in 2012. It has a global strategy and targets a variety of assets in sectors including energy (such as transmission, pipelines, thermal and renewable generation) and transportation (comprising airports, seaports and toll roads).

Infrastructure is part of the system’s real assets portfolio, which also includes real estate. As of 31 January 2016, the portfolio totalled $7.2 billion, representing 4.7 percent of the system's total AUM. It is slightly lower than the range NYCRS targets for its real assets portfolio, which according to Eric Sumberg, director of communications of the Office of New York City Comptroller Scott Stringer, is between five and six percent.

Other infrastructure commitments NYCRS has made include $300 million to IFM Global Infrastructure Fund, $200 million to First Reserve Energy Infrastructure Fund II and $208 million to KKR Global Infrastructure Investors II. It made its debut infrastructure investment in July 2013 by committing $300 million to Brookfield Infrastructure Fund II, which Toronto-based Brookfield Infrastructure closed in October of that year on $7 billion, making it the second-largest infrastructure fund ever raised.

Like GIP, Brookfield is also in the process of raising a follow-on vehicle. BIF III has a target of $10 billion and a hard-cap set at $12 billion.

While the infrastructure fund managers are competing on the fundraising trail, earlier this month they teamed up in a joint $6.75 bid for the acquisition of Asciano, one of Australia's largest rail and ports operators. The joint bid, in which Brookfield’s and GIP’s respective consortium members are participating, put an end to a months-long battle between the two investor groups competing for the Australian logistics company.

The five pension funds comprising the New York City Retirement System – the New York City Employees’ Retirement System, the Teachers’ Retirement System of the City of New York, the New York City Police Pension Fund Subchapter 2, the New York City Fire Department Pension Fund Subchapter Two and the New York City Board of Education Retirement System – are financially independent. Each one has its own board of trustees.

The New York City Comptroller is the investment advisor and custodian of the five funds, which serve more than 700,000 retirees, beneficiaries and city and city-affiliated employees.