The $12 billion State Universities Retirement System of Illinois has made its first infrastructure investments, committing $80 million to two managers as it builds up its 1 percent allocation to the asset class.
The pension, which approved the 1 percent infrastructure allocation in 2008, committed $40 million each to Alinda Infrastructure Fund II, which is targeting $3 billion, and Macquarie Infrastructure Partners II, targeting $4 billion.
Illinois Universities will look for new infrastructure managers every 18 to 24 months to build its allocation out to the full 1 percent, according to Daniel Allen, chief investment officer at the pension.
“Infrastructure is a diversifier to the overall asset allocation of the fund,” Allen said, explaining why the pension decided to explore the asset class. “We didn’t use the full 1 percent. It made more sense to commit a portion of that and in a couple of years add on to the programme.”
Illinois Universities interviewed about 30 infrastructure managers over the past year and whittled the group down to six finalists, finally choosing Alinda and Macquarie.
Other US pensions have also recently built allocation space in their portfolios for infrastructure. For example, the New York State Common Retirement Fund has carved out a 5 percent niche for investments including infrastructure and real assets like gold and timber in its portfolio. The pension has not yet committed capital to any managers.
And in the spring of 2008, the $11.8 billion Teachers' Retirement System of Louisiana approved a 9 percent allocation to infrastructure. Of that, 6 percent has already been allocated, according to spokesperson Lisa Honore. Retirement system chief investment officer Philip Griffith has told InfrastructureInvestor in an email that Hamilton Lane Advisors are currently looking for infrastructure managers on behalf of the pension.