US - The California Public Employees' Retirement System (CalPERS) is looking to gain exposure to direct infrastructure assets while building strategic relationships with other investors.
At the Pension Bridge Annual conference at the Four Seasons Hotel in San Francisco yesterday, CalPERS chairman of the investment committee George Diehr told attendees that as the pension fund's infrastructure programme continues to grow, staff would look at direct investments, rather than infrastructure funds.
He said the portfolio currently consists of four funds with US$700m in commitments.
With direct investments, "the return possibilities are better and it gives you that control and ability to say how governance is arranged," he told GP on the sidelines.
Meanwhile, CalPERS will look to build strategic relationships with general partners and other pension funds which could provide CalPERS with better access to deals, as well as allowing smaller pension funds to participate in investments they may otherwise not have been able to, he said.
His comments echo those of Ontario Municipal Employees Retirement System (OMERS) chief executive Michael Nobrega who, speaking recently from his Toronto offices, said the pension fund manager is already marketing its global strategic investment alliance (GSIA) programme in the US, and plans to start marketing in Europe soon.
The global strategic alliance would bring four institutional investors together that would contractually agree to co-invest in infrastructure and real estate assets based on a predetermined investment thesis.
The GSIA was announced last year and according to OMERS is the first of its kind.
"The advantage of the alliance is that there are no commitment fees, no fees on vehicle finance, disposition, structure. There's no carry interest. It's a straight deal whereby four major alliance players come together to...pursue what we would call alpha assets that generate long-term stable cash flows," Nobrega said.
Nobrega declined to say exactly which funds he's been in discussions with but said OMERS has reached out to "all the major funds around the world".
Diehr could not immediately say if CalPERS staff had been in discussions with OMERS about the GSIA.
To read more of our one on one interview with Michael Nobrega, click here.
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