A spokesperson for WSIB told Infrastructure Investor that the investment will be split in two, with up to $500 million invested directly in GIP III and the balance going into a separately managed account investing alongside the fund. Approved unanimously by the pension's board on Thursday, the commitment remains subject to due diligence and final negotiations.
The total commitment represents a four-fold increase on the $250 million WSIB invested in GIP’s second infrastructure fund, which at $8.3 billion remains the largest infrastructure vehicle ever raised.
Should other institutional investors that previously invested with GIP simply double their GIP II commitments, the New York fund manager would easily reach its target for GIP III, which according to WSIB is $12.5 billion. Launched last month, the vehicle is said to have a hard cap of $15 billion.
In addition to WSIB, investors in GIP II include the California Public Employees’ Retirement System ( through a $250 million commitment), the Florida State Board of Administration ($150 million), the Oregon State Treasury ($150 million), the Virginia Retirement System ($150 million) and the Maine Public Employees Retirement System ($75 million), according to Infrastructure Investor Research & Analytics.
WSIB is investing in GIP III in a bid to “selectively fulfill” its tangible assets programme, an asset class it established in 2007 and which targets investments in infrastructure, agriculture, commodities, natural resource rights and timber.
WSIB's long-term allocation target for tangible assets is 5 percent. These totalled $1.6 billion as of June 30, representing about 1.5 percent of WSIB's $106.9 billion portfolio.
The organisation does not have a separate target allocation for infrastructure, nor does it have a sub-set statistic for infrastructure allocation, according to WSIB’s spokesperson.
GIP III will most likely have a similar remit to its predecessor, providing institutional investors with exposure to a global and diversified portfolio of assets. The third fund will probably continue to form investment partnerships with large corporations, now a well-established feature of GIP II.
Other vehicles currently in market include that of Canadian asset manager Brookfield Infrastructure Partners. BIP is raising its third infrastructure fund with a target of $10 billion and a hard cap of $12 billion.