UNITED STATES- The Alaska Permanent Fund Corporation making its first move towards investing in infrastructure and plans to initially invest up to $800m ($601.9m euros) in the concept as a separate asset class.
The $40bn pension fund agreed at its board meeting on May 31st to set aside 2% of its total assets.
While Alaska has made no firm decision on which managers will be hired to invest this capital, Dave Stuart, manager of real estate investments for the pension fund, believes investing in infrastructure will be beneficial to the fund.
"We think that it makes the most sense to have infrastructure its own asset class. It really doesn’t correlate with any of the other asset classes," said Stuart.
A final decision as to who will manage the funds is not expected to be made until the pension fund’s August board meeting.
However, industry sources have indicated that the allocation will be split between Citigroup and Global Investment Partners, having competed against JP Morgan Asset Management for the tender.
Global Investment Partners, which is a joint venture operation between GE and Credit Suisse, is expected to be awarded a $300m value-added mandate while Citigroup will handle the remaining $500m.
Alaska is looking to achieve a gross return of 10-12% through its global infrastructure strategy over the long term.
Infrastructure investments could, in the main, be divided four main types of assets
- energy, transport, water and social - while some investments could flow into utilities, toll roads, bridges, wastewater and education facilities.
Alaska has stipulated its assets could be invested in several around the world, including Japan, United Kingdom, Western Europe, Germany and Sweden as well as taking advantage of US opportunities in California, New York, Texas and Florida.
