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Calpers buys 10 pct stake in Indiana toll road

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A highway sign is seen in Warsaw, Indiana April 1, 2011. The city is a part of America's Midwestern "Rust Belt", the heartland of the country and home to big unionized manufacturers like the auto and steel industries. Picture taken April 1, 2011. REUTERS/Eric Thayer (UNITED STATES - Tags: SOCIETY) - RTR2KTTA
  • Calpers was among bidders in toll road’s 2014 bankruptcy
  • Size of deal unclear
  • Pension established new real-assets investment plan in April

California Public Employees’ Retirement System’s real-assets division purchased a 10 percent stake in an Indiana toll road from IFM Investors.

The investment marks Calpers’s first direct investment in a U.S. transportation asset, the pension system said in a statement. Terms weren’t disclosed.

Indiana Toll Road Concession Co emerged from bankruptcy last year when IFM purchased 100 percent of its equity for $5.725 billion. The company signed a lease to operate the 157-mile road, which runs between Ohio and Illinois, in 2006. There are 65 years remaining on the lease.

Calpers was among bidders for the toll road when the company declared bankruptcy in 2014, Reuters reported. The $278.9 billion retirement system partnered with Hastings Funds Management and Italian toll road operator Autostrade Meridionali SpA to put together a bid for the asset. Canadian Pension Plan Investment Board and Ontario Municipal Employees Retirement System also participated in the process.

While it’s unclear how much Calpers paid for its stake in the Indiana toll road, the purchase increased the net asset value of its infrastructure investment portfolio to $3.1 billion. In an April real-assets report, Calpers valued its infrastructure portfolio at $2.3 billion, roughly $2.2 billion of which was unfunded.

Calpers recently adopted a new real-assets investment plan, which includes its infrastructure portfolio, in an effort to streamline processes governing its existing portfolio.

The retirement system’s infrastructure team has been focusing on building out exposure in the sector through separate accounts, with a secondary focus on direct investment, according to a copy of the plan.

“We continue to make progress building up this important program, and the [Indiana toll road] aligns well with our recently adopted strategic plan for real assets,” said real-assets Managing Director Paul Mouchakkaa in a statement.

The infrastructure program was netting a 10.5 percent return since inception, according to the April report. A Calpers spokesman declined to comment beyond the release.

Action Item: Calpers’s real-asset plan: http://bit.ly/1q0Q4ab

Photo of highway sign in Warsaw, Indiana, on April 1, 2011, courtesy of Reuters/Eric Thayer.