The Public Employees' Retirement Association of New Mexico (PERA), which manages investments for the state's Public Employees, Judicial, Magistrate and Volunteer Firefighters retirement funds, has committed $65 million to Ardian Infrastructure IV, a 2015 vintage fund with a €2 billion initial target.
While PERA does not have a specific allocation target for infrastructure assets, which fall within its real assets commitments categorically, the pension has previously committed to Brookfield Infrastructure II in November 2013 and KKR Infrastructure Investors II in December 2014. As of March 2015, PERA's investment in Brookfield's fund was valued at just under $17 million, representing 3.95 percent of its real asset allocations, while the KKR investment was valued at roughly $1.26 million, or about 0.29 percent of its real asset exposure.
In addition to the Ardian commitment, the pension recently also made a commitment of an undisclosed amount to IFM Investors for private infrastructure investment. According to a PERA representative, Ardian Infrastructure IV plans to pursue the same strategy as its predecessor, targeting developed markets and OECD countries in western Europe with a focus on developed projects in the transportation, energy, telecommunications, social, renewables and water sectors.
“Ardian provides a unique opportunity to invest with a strong manager who has extensive experience within the infrastructure space and a deep network of employees and contacts with which to pursue infrastructure investment opportunities. They have repeatedly proven to be a talented and valuable manager,” the spokesperson said. “Ardian will complement PERA's current infrastructure investments through their refined focus on opportunities within western Europe.”
On April 1, the pension also released an RFP seeking discretionary investment management services for a listed infrastructure portfolio with an estimated target mandate size of $100 to $200 million. In order to qualify, firms were required to have $1 billion in total assets under management (AUM), with $500 million AUM in the proposed listed infrastructure products – as well as at least one separately-managed portfolio of a minimum $25 million in the product with willingness to accept a possible allocation of $100 to $200 million or more.
PERA anticipates that proposed projects backed under the RFP will be cash-funded; it is open to the idea of investing with more than one manager, according to the documents. The term of any contract formed out of the RFP will be eight years. The spokesperson said that this commitment is unrelated to the RFP.
Ardian has set a net return target of between 10 and 13 percent for its fourth infrastructure fund, which was launched in January and is expected to reach its next close sometime this month.
Total PERA assets were valued in excess of $14.4 billion as of December 31, 2014. Since its inception in June 1986, the plan is up net 9.63 percent as of April 30, according to an advisor to the pension's executive committee.