SWFs and pension funds active in Q2

Recently, there has been a lot of buzz about unlisted infrastructure investment activity, driven by the tremendous amount of capital from pension funds and sovereign wealth funds, such as the New York City Retirement System’s $500 million commitments to two infrastructure funds, the Sacramento County Employees' Retirement System’s $100 million commitment to a secondary infrastructure fund and the New Mexico State Investment Council’s  $100m commitment to the First Reserve Energy Infrastructure Fund II.

  

Data from Infrastructure Investor Research and Analytics shows that more than 70% of pension funds and sovereign wealth funds with an appetite for infrastructure want access to the energy sector while over half have appetite for transport. In terms of location, unsurprisingly, North America is the most popular destination for these investors, with over 70% are currently investing in the region. However, we also observe sovereign and pension investors pouring more new money in emerging markets. One such example is the Canada Pension Plan Investment Board, which announced in June 2014 that it will make its first infrastructure investment in India by investing a total of INR 20 billion in L&T Infrastructure Development Projects Limited.

 

In addition, many pension and sovereign funds we monitor are seeking ways to invest directly, either through a consortia, co-investing with fund managers, or both. For example, the board of trustees of the Alaska Permanent Fund Corporation has recently approved $400 million to infrastructure, including up to $200 million in co-investments. For funds which are larger in size, many have developed their own asset management capabilities over the years and are being more active in gaining direct exposure than before.  For example, the Kuwait Investment Authority has revealed previously that it will directly invest up to $5 billion in the asset class over the next three-to-five years.