GIP mandate leads CalPERS’ $1.5bn infra allocation

The US’s largest public pension made commitments to GIP and JPMorgan, committing capital equal to around a third of its current infrastructure portfolio.

The California Public Employees’ Retirement System has agreed to set up a $1 billion separately managed account with Global Infrastructure Partners, according to documents published this week by the pension fund.

A board meeting document states that the $357.7 billion pension fund will decide next week whether to approve the infrastructure mandate, as well as a $500 million commitment to the open-ended JPMorgan Infrastructure Investments Fund. A CalPERS’ spokeswoman told Infrastructure Investor that the account with GIP would target core infrastructure assets in the US and other developed markets.

GIP is currently raising its fourth infrastructure fund, which has collected $13.5 billion so far and is expected to hold a final close on its $20 billion hard-cap by September.

According to a separate document, the two commitments represent around a third of the pension fund’s infrastructure portfolio, which, as of 30 September 2018, had a net asset value of $4.3 billion. They also account for 1.2 percent of the fund’s total portfolio, an amount that is slightly higher than the fund’s interim target allocation to infrastructure of 1 percent.

Infrastructure is part of CalPERS’ real assets portfolio, which also includes real estate and forestland. According to the board documents published this week, this portfolio totaled $40.1 billion.

A third CalPERS document states that the asset class has been the top performer within the group “across all measured periods”, its performance having been “primarily driven by core holdings”.

The majority of the infrastructure portfolio comprises transport and power assets – 46 percent and 44 percent, respectively – with the remainder invested in energy, water and communications.

According to the pension documents, CalPERS’ infrastructure investment strategy is more heavily weighted towards core infrastructure and less towards value-add and opportunistic strategies.

Last December, Paul Mouchakkaa, managing investment director of CalPERS’ real assets group, recommended increasing the pension fund’s maximum exposure for infrastructure in international developed markets from 50 to 60 percent while reducing maximum US exposure from 50 percent to 40 percent.