North Dakota pushes Macquarie towards MIP IV hard-cap

The North Dakota State Investment Board is committing $140 million to Macquarie Infrastructure and Real Assets’ fourth flagship fund, according to documents made public before the pension manager’s upcoming board meeting.

NDSIB’s first commitment to MIRA’s infrastructure programme is meant to diversify the pension system’s infrastructure portfolio.

“JPMorgan is managing approximately $407.6 million in infrastructure mandates and RIO [Retirement and Investment Office] investment personnel are looking at options to diversify the portfolios to lower manager concentration, increase diversification by revenue drivers, geography and sectors, thereby potentially lowering overall risk,” according to NDSIB’s meeting materials.

Approximately 75 percent of NDSIB’s $544 million infrastructure portfolio is tied up in commitments to the JPMorgan Infrastructure Investment Fund, an open-ended vehicle focused on core and core-plus assets.

NDSIB has decided that $65 million will come from the Pension Trust Fund, and $75 million  from the Legacy Fund, two of the three pooled vehicles the state investment board administers in collaboration with the RIO.

The commitment to Macquarie Infrastructure Partners IV will now represent 21 percent of NDSIB’s portfolio, and exposure to JPMorgan will fall from 75 to 60 percent. It comes after NDSIB approved another $140 commitment to ISQ Global Infrastructure Fund II, which I Squared Capital closed on $7 billion in September.

For MIRA, the commitment inches MIP IV closer to the fund’s $5 billion hard-cap. The firm has raised more than its $3.5 billion target and, as of 27 September, had collected around $4.8 billion, according to the pension documents.

MIRA is targeting a net internal rate of return for the fund of 10-12 percent and a yield of 4-6 percent. The firm will invest between $400 million and $600 million per deal in up to 10 assets, mostly planned to be located in North America, according to NDSIB’s meeting documents. MIRA’s strategy is similar to JPMorgan’s in that both firms are targeting core and core-plus assets in sectors including utilities and energy, transportation, communications and waste management.

Other known investors in MIP IV include the New Mexico State Investment Council, Korea Teachers’ Credit Union, Public Officials Benefit Association and ING Life Insurance.