Virginia commits $200m to GIP III

After investing $150m in GIP II, the Virginia Retirement System has joined a growing list of pension funds that are increasing their commitments to GIP’s latest vehicle.

With a commitment of $200 million from the Virginia Retirement System, Global Infrastructure Partners (GIP) is one step closer towards reaching the $12.5 billion target it has set for its third infrastructure fund.

The commitment, recently approved by its board of trustees, makes VRS one of several investors that have chosen to invest once again with the New York-based infrastructure fund manager after backing GIP’s earlier vehicles.

Asked to comment on its most recent decision, a VRS spokesperson said “the decision was made because it fits the portfolio strategy.”

According to VRS' website, the pension's real assets portfolio, which includes infrastructure, totalled $8.1 billion as of 30 September 2015. That amount represents 12.5 percent of the pension fund’s $65.4 billion in assets under management.

VRS does not provide separate figures for infrastructure. According to Investor Infrastructure Research & Analytics, however, VRS’s infrastructure portfolio represents 0.8 percent of the total and is significantly below the pension's target allocation of 2.5 percent.

Earlier this month, the Arkansas Teacher Retirement System (ATRS) approved an investment of up to $50 million in GIP III, based on the recommendation of its real asset consultant Aon Hewitt and its own investment staff.

“The up to $50 million investment is to help achieve the 15 percent target allocation to real assets,” according to ATRS’ meeting materials. “The reason for entry is Global Infrastructure Partners best in class rating among its peer group.”

According to ATRS' website, real assets, which along with infrastructure includes real estate, represented 11.2 percent of its $14.2 billion portfolio, as of 31 March 2014. More up-to-date figures were not available, nor were figures specific to infrastructure. The pension fund did not respond to a request for comment.

According to Research & Analytics, ATRS’ other commitments to the asset class include $50 million to First Reserve Energy Infrastructure Fund II and $50 million to Antin Infrastructure Partners II, in early 2014.

GIP III, which has a hard cap of $15 billion, will have a five-year investment period and a 10-year duration, with four possible one-year extensions. Like its predecessor, it will invest in the energy, transportation and water sectors in developed markets.

Institutional investors that have already committed to GIP III include the Oregon Investment Council (for an amount of $400 million), which invests all of the State of Oregon’s funds including the Oregon Public Employees Retirement Fund, and the Washington State Investment Board (for $1 billion).