The Employees Retirement System of Texas (ERS) is primed to dedicate $235 million a year to its budding ‘private infrastructure portfolio’ for the next four years, the US pension plan said.
The system, which has $24 billion in retirement assets, prevailed on its board of trustees in a meeting earlier this week to approve the so-called ‘ERS Infrastructure Program’ as part of a broader initiative to complete $2.4 billion in alternative investments in 2014.
ERS decided in February to carve out a bucket for infrastructure, earmarking about $945 million, or a target 4 percent allocation, to the asset class.
A ‘tactical plan’ for the proposed allocation entailed putting 1 percent of the money into publicly traded infrastructure securities, with the remaining 3 percent – or $710 million – going toward ‘real’ infrastructure starting in 2014 through 2018.
The board, in endorsing the Infrastructure Program, took into account a report from ERS consultant Altius Associates, which called infrastructure a “developing asset class” effective as a hedge against inflation. Altius aided the pension in formulating the Program.
The system has begun manager due diligence, according to ERS. In addition, the pension has a $150 million co-investment programme with US energy-focused fund manager Panda Power Funds that will be transitioned into the private infrastructure portfolio.
ERS estimated making “two or three” commitments totaling $235 million to infrastructure funds next year.