GIP III could get $1bn boost from Washington State

Global Infrastructure Partners' (GIP) efforts to raise the world's largest infrastructure fund for the second time in a row may be off to a running start.

With the Washington State Investment Board (WSIB) considering backing the New York-based firm with a $1 billion commitment, the vehicle could soon be making substantial progress towards its $12 billion target.

“Our Private Markets Committee approved recommendation to the Washington State Investment Board of investing up to $500 million in Global Infrastructure Partners III and up to $500 million in a separately managed account with Global Infrastructure Partners III,” Chris Phillips, WSIB's spokesperson, told Infrastructure Investor by e-mail.

WSIB will make a decision at its upcoming board meeting this Thursday.

The Investment Board invested $250 million in GIP II, which closed on $8.3 billion in October 2013 and became the largest infrastructure fund ever raised. Should the firm exceed its target by hitting its hard cap – reportedly at $15 billion – it will continue to hold that record.

WSIB is considering a significantly higher commitment to GIP III as it looks to “selectively fulfill” its tangible assets programme, an asset class it established in 2007 and which targets investments in agriculture, commodities, natural resource rights and timber, in addition to infrastructure. WSIB's long-term allocation target for tangible assets is 5 percent.

As of June 30, 2015, tangible assets totalled $1.6 billion, representing about 1.5 percent of WSIB's $106.9 billion portfolio.

GIP III will most likely have a similar remit as its predecessor, providing institutional investors exposure to a global and diversified portfolio of assets. The third fund will also be likely to continue the investment theme of forming investment partnerships with large corporations, now a well-established feature of the firm's second fund. 

Other vehicles currently in market include that of Canadian asset manager Brookfield Infrastructure Partners. BIP is raising its third infrastructure fund with a target of $10 billion and a hard cap of $12 billion.

Headquartered in Olympia, Washington, WSIB manages 17 state retirement and public funds on behalf of teachers, law enforcement officers, fire fighters and judges. In addition to this, WSIB manages 18 funds that provide benefits and support to industrial insurance, colleges and universities, and developmental disability programmes.