New infra commitments from CalPERS total $550m

The California Public Employees’ Retirement System (CalPERS) has committed $300 million to Morgan Stanley’s second infrastructure fund and $250 million to UBS International Infrastructure Fund II, about two weeks after announcing a $500 million strategic partnership with UBS Global Asset Management, Infrastructure Investor has learnt.

In early July, Infrastructure Investor reported that the infrastructure investment and management arm of Morgan Stanley had so far raised $1.5 billion for the Morgan Stanley Infrastructure Partners II (MSIP II) fund. MSIP II has a target of $4 billion – the same amount the firm raised for its maiden infrastructure offering, MSIP I, which closed in May 2008.

It is unclear whether the second vehicle will follow the same investment strategy as its predecessor, which invested in transportation, energy infrastructure, water and telecommunications. A spokesman for MSI declined to comment.

CalPERS' commitment also brings UBS' International Infrastructure Fund II, a vehicle the Swiss-based asset manager is in the process of raising, closer to reaching its $2 billion target. The fund, which as of July had raised a confirmed $379.9 million, will target direct investments in transportation, utilities, energy and social infrastructure assets in OECD countries.

Earlier this month, CalPERS and UBS Global Asset Management (Americas), announced the creation of Golden State Matterhorn (GSM), a joint venture that will allow both parties to jointly pursue opportunities in sectors such as power, energy, transportation, water, communications, waste and social infrastructure in the US and other OECD countries.

The goal for GSM, to which CalPERS has committed $485 million, is to make two to four investments over the next few years. UBS had not provided more details at the time, but a spokesperson subsequently told Infrastructure Investor that the $15 million UBS committed to GSM “is separate and distinct from UBS commitments to other strategies/offerings.”

UBS declined to comment on CalPERS’ $250 million commitment to its fund.

CalPERS' partnership with UBS, as well these recent commitments, which total $550 million, appears to be in line with CalPERS’ decision earlier this year to up its allocation target in infrastructure to 3 percent from 2 percent previously. The new target allocation went into effect on July 1.

CalPERS, which is based in Sacramento, administers health and retirement benefits on behalf of 3,089 public school, local agency and state employers. The institution counts more than 1.7 million members in its retirement system and more than 1.3 million in its health plans.

As of April 30, 2014, CalPERS had invested $1.6 billion in infrastructure, representing 0.5 percent of its $290.5 billion portfolio, according to information available on the pension fund’s website.