Investors - AUGUST 18, 2014

CalPERS searches for infrastructure consultant, hires managers

by Drew Campbell

The California Public Employees’ Retirement System has announced commitments totaling more than $1 billion to global infrastructure managers Morgan Stanley and UBS, and listened to finalist presentations from three infrastructure consultants — Courtland Partners, Meketa Investment Group and StepStone Group — as the final step in a review that will select an infrastructure consultant after the next investment board meeting in September. Meketa is the current consultant and its contract, unless renewed, expires in March 2015.

“Both managers bring extensive experience and a proven track record in global infrastructure investing that make them a great fit for our program,” says Joe DeAnda, information officer in the CalPERS office of public affairs, regarding the Morgan Stanley and UBS mandates.

StepStone hired David Altshuler from Meketa Investment Group in January. He was the lead infrastructure consultant and worked closely with CalPERS. StepStone was awarded the highest ranking among the three consultant finalists, which also included Meketa and Courtland Partners.

CalPERS announced a $735 million commitment to UBS in August, including $485 million to Golden State Matterhorn, a $500 million joint venture between the pension and investment manager, and $250 million to UBS International Infrastructure Fund II. UBS has made a $15 million co-investment to the joint venture partnership, which expects to make between two and four investments between now and 2018.

UBS International Infrastructure Fund II launched in April 2013 and has a $2 billion fundraising goal. Its predecessor had a final close in November 2008 after exceeding its fundraising goal by raising $1.5 billion.

The predecessor fund targeted established direct investment opportunities in OECD countries, investing in a variety of infrastructure assets including but not limited to transportation, utilities, energy and social infrastructure. The fund focused on brownfield investments, though up to 30 percent of its equity was made available for greenfield investments. No target final close date for UBS IIF II has been disclosed.

Morgan Stanley was awarded a $300 million commitment to its Morgan Stanley Infrastructure Partners II fund, which received a commitment from Teachers Retirement System of Texas in June.

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