The $8.7 billion (€5.6 billion) San Diego County Employees Retirement Association (SDCERA) has committed $75 million to Macquarie Infrastructure Partners II, a North American long-term infrastructure fund, part of the pension’s drive to increase its allocation to infrastructure.
SDCERA manages the retirement assets of more than 37,000 employees of San Diego County.
Macquarie Infrastructure Partners’ first fund, managed by the New York-based subsidiary of the Australian infrastructure giant Macquarie Group, bought stakes in several toll roads and utility companies in the US and Canada.
The pension also recently voted to commit $75 million to Global Infrastructure Partners (GIP), a fund jointly created and sponsored by Credit Suisse and General Electric.
These commitments follow an October 2007 decision by the SDCERA investment board to increase its allocation to infrastructure to 5 percent and reduce its allocation to emerging market debt and public equity.
SDCERA has also adopted a set of guidelines for its infrastructure targets, including a benchmark of CPI plus 500 basis points; commitments to between six and 10 managers, with no more than 30 percent going to any single manager; and a portfolio composition heavily geared towards North American and non-American OECD members.
SDCERA’s growing interest in infrastructure is part of a larger trend of institutional LP’s drifting towards infrastructure, however defined, as these assets are often considered safe investments independent of a downturn in the business cycle or inflation.
The California Public Employees Retirement System, the largest and most influential public pension in the country, recently unveiled a 5 percent infrastructure allocation, which it classifies as an “Inflation-Linked Asset Class.”