GIP I boosts Alaska Permanent Fund’s infra returns

Infrastructure’s one-year return is comparable with private equity for Alaska Permanent Fund’s $64.5bn portfolio.

Infrastructure generated a one-year return of 18.42 percent for Alaska Permanent Fund in 2017, led by an out-sized performance from Global Infrastructure Partners’ first fund, according to meeting documents released last week.

GIP I generated a net return of 51.18 percent, 42.50 percent and 35.97 percent over one, three and five-year periods, respectively. Strong performance from GIP played a role in infrastructure’s high return, as of 31 December, which was slightly less than private equity’s 22.09 percent return and considerably more than real estate’s 5.51 percent.

APF now manages $64.5 billion in assets, the documents reveal. Infrastructure accounts for roughly 3.3 percent or $2.13 billion in market value of APF’s total portfolio. Real estate assets make up $5.62 billion and private equity is at $4.58 billion.

Nearly half of the infrastructure portfolio, 44 percent, is invested in transportation assets, and the next highest sectors are regulated utilities and power generation at 20 percent and 17 percent, respectively. Eighty-five percent of APF’s infrastructure assets are in Europe, North America and the UK.

APF’s private income portfolio, which includes infrastructure along with private credit and income opportunities, posted a one-year return of 15.28 percent. Infrastructure led the way, outperforming both private credit and income opportunities, which generated 10.55 percent and 9.11 percent, respectively.

The documents show APF has set a $750 million deployment target for its income group for the current fiscal year ending 30 June. The permanent fund said a recent $100 million co-investment with Global Infrastructure Partners into renewables developer Equis Energy and a $200 million commitment to sustainable infrastructure investor Generate Capital count towards that deployment target.

When APF’s infrastructure holdings are broken down by listed and unlisted, private funds still have an advantage.

Overall, APF’s infrastructure and real assets portfolio has achieved a net IRR, since inception, of 10.3 percent. “Inception to-date gains on [the] programme stand at $1.1 billion, currently, 98 percent earned in [the] past five years,” according to the pension fund.