CalPERS Invests $2bn in Infrastructure

TL/DR -

California Public Employees Retirement System (CalPERS) has committed $2bn to three new infrastructure projects. The pension fund has allocated $1.7bn to Global Infrastructure Partners V, a fund managed by Global Infrastructure Partners (GIP), with the investment to be divided equally between the fund and a sidecar vehicle associated with it. CalPERS has also invested $300m in Harbert Gulf Pacific Power (HGGP), a joint venture focusing on North American power infrastructure investments.

CalPERS Commits $2bn to New Infrastructure Investments

California Public Employees Retirement System (CalPERS) has made three new infrastructure commitments totaling $2bn (€1.84bn), as disclosed in the pension fund's board meeting documentation.

The majority of this funding, $1.7bn, goes into Global Infrastructure Partners V, a fund governed by Global Infrastructure Partners (GIP). GIP is currently aiming to raise $25bn for its global infrastructure fund. CalPERS states this investment in GIP fund will be divided evenly to be invested directly and through a sidecar vehicle associated with the fund.

CalPERS has also invested $300m in the Harbert Gulf Pacific Power (HGGP), a joint venture with the Harbert Management Company for North American power infrastructure investments. As of the start of 2023, the HGGP partnership was worth $1.8bn, with a one-year total return of 6.2% and a five-year return of 8.3%.

In an effort to simplify its infrastructure portfolio, CalPERS plans to combine the value-add and opportunistic asset classes into a single non-core category. This is a response to a recently detected policy violation.

Currently, CalPERS' 27.01% allocation to value-add investments surpasses the pension fund’s overall limit of 25%. This over-allocation was due to a recent preference for value-add strategies in infrastructure commitments, updated asset valuations, and capital withdrawals.

For more information, you can read the latest IPE Real Assets magazine here.

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