CalPERS Ups Direct Investments in Infrastructure

The California Public Employees’ Retirement System , the biggest U.S. public pension fund, will buy more direct stakes in infrastructure assets such as roads and airports, Reuters reported. The fund is targeting $5 billion in infrastructure investments over the next several years. CalPERS currently has $860 million committed to infrastructure, most through private equity funds including Carlyle Group and Alinda Capital, Reuters said.

(Reuters) – CalPERS, the biggest U.S. public pension fund, sees itself buying more stakes directly in assets such as roads and airports as it targets $5 billion in infrastructure investments, one of its portfolio managers said.

“Direct investment is definitely a goal of our (infrastructure) programme. We have a target of $5 billion and we will be implementing that over a multi-year period,” Christine Yokan told the Infrastructure Investor Europe conference in Berlin on Friday.

CalPERS, the California Public Employees’ Retirement System, has $860 million committed to infrastructure, most through private equity funds such those of Carlyle and Alinda, according to its latest quarterly performance report.

But its $155 million acquisition of a 12.7 percent equity interest in London’s Gatwick Airport from Global Infrastructure Partners in June 2010 marked its entry into the direct M&A infrastructure universe, which the major Canadian pension funds are more accustomed to.

Yokan said that direct investments for CalPERS were likely to take place with it as a member of a consortium.

“There is one thing that we recognise about our programme, we are going to be building partnerships, and I mean that quite broadly, with partners who are capable, with fund managers and with others of our peers, in consortia,” she said.

Infrastructure, which offer CalPERS inflation protection and the ability to match long-term stable cash flows with long-dated liabilities, has attracted dedicated allocations from the pension fund relatively recently. CalPERS launched its infrastructure investment programme in 2008.

CalPERS earned a 12.5 percent overall return in 2010, helping lift the value of its assets by more than $65 billion from a March 2009 low of $160 billion.

(Reporting by Greg Roumeliotis. Editing by Jane Merriman)