McMorgan Infrastructure Fund I, the first infrastructure offering raised by the San Francisco investment manager, is the sixth and final member to join the Global Strategic Investment Alliance (GSIA), an unlisted co-investment infrastructure platform set up by the Canadian pension Ontario Municipal Employees Retirement System (OMERS), which has secured more than $12.5 billion in capital commitments.
Earlier this month, McMorgan held a final close on its feeder fund of $1.33 billion, exceeding the $1.25 billion required to join the GSIA.
“We are excited to unite long-term, like-minded capital in the United States with such prestigious global investment partners,” said John Santaguida, chief executive of McMorgan & Co., the fund’s investment manager and general partner, in the statement issued on Monday.
Other Alliance members include a consortium led by Mitsubishi Corporation, which committed $1.25 billion. The consortium’s other members are the Japan Bank for International Cooperation, Mizuho Corporation and the Pension Fund Association of Japan.
“McMorgan chose to pursue joining the GSIA as we recognise the expertise of Borealis in identifying, underwriting, and managing large-scale infrastructure assets,” a McMorgan spokesperson told Infrastructure Investor, referring to OMERS’ infrastructure investment arm.
“We believe that the risk-reward profile and stable cash flows produced by these large-scale, fully operational brownfield assets, best match the long-term natured liabilities of the plans we serve,” the spokesperson added.
GSIA’s mandate is to invest in large-scale, fully operational brownfield assets with an enterprise value of more than $2 billion.
GrandFund Investment Group served as placement agent during the fundraising and will serve as operating advisor for the McMorgan fund going forward.
GrandFund will coordinate with the GSIA administrator and Borealis personnel and liaise between McMorgan and the GSIA administrator, according to the McMorgan spokesperson.
“Members of the GrandFund team, specifically CEO Charlie Bertucio, have long-standing relationships with both OMERS and Borealis making them well suited for the role of operating advisor,” the McMorgan representative said.
OMERS, which has committed $5 billion to the co-investment fund, launched GSIA at the end of 2009 with an initial target of $20 billion. However, in February of this year, Jacques Demers, president and chief executive of OMERS Strategic Investments, told Infrastructure Investor that he expected the fund to close on $12 billion to $13 billion in the first half of 2014.
A spokesperson for OMERS confirmed on Monday that the fund had closed on $12.575 billion, making it effectively the largest pooling of private capital commitments by an infrastructure investment manager. The largest traditional infrastructure fund ever raised was Global Infrastructure Partners' second fund, which closed on $8.25 billion in October 2012.
GSIA sealed its first deal last year, when the five shareholders it had at the time bought a one-third stake in US power plant Midland Cogeneration Venture (MCV). It is understood that the size of the deal, undisclosed by the transacting parties, stood at around $1 billion.
Founded in 1969, McMorgan & Co. is an investment manager exclusively dedicated to Taft-Hartley plans, multi-employer pension plans collectively bargained with each participating employer.
Taft-Hartley refers to the Taft-Hartley Act, also known as the Labour Management Relations Act, passed in 1947. The law amended the National Labour Relations Acts (NLRA) of 1935, by defining the rights and obligations of unions. The NLRA had only referred to unfair labour practices committed by employers.