GLOBAL - The $145bn (€111bn) California State Teachers' Retirement System (CalSTRS) has awarded Industry Funds Management (IFM) a $500m infrastructure mandate to invest in a diversified portfolio of core infrastructure assets in North America and Europe.
The CalSTRS mandate involves core infrastructure assets such as regulated utilities, transport and other cash-yielding, inflation-hedged infrastructure investments.
The mandate will be invested in two tranches. The first $300m will be invested immediately, while the second tranche of $200m will be invested within the next 18 months.
CalSTRS said infrastructure would help it achieve a number of "important goals", such as addressing some of the "portfolio issues" that emerged from the global economic crisis in 2008-09.
Harry Keiley, chairman at the CalSTRS Investment Committee, said: "What the recent economic crisis demonstrated was the need for greater diversification in our investment portfolio, in areas that would also serve as a hedge against inflation.
"This type of investment aligns our goals as patient long-term investors, with both the jobs generation and infrastructure improvement our economy needs."
CalSTRS said it selected IFM due to its investor-owned structure and proven track record in acquiring and managing major infrastructure businesses through economic cycles.
Chris Ailman, CIO at CalSTRS, said: "We selected a well-established and well-respected partner precisely because CalSTRS is relatively new to the sector, and we want to get to know it well before venturing beyond the fund structure.
"This decision is an opportunity for CalSTRS to partially hedge inflation risk by participating in the growing supply of high-quality infrastructure assets in developed economies, following the model of Australian pension funds, [which] have pioneered this sector and have leveraged the benefits of scale to deliver returns to their members."
Last month, IFM was selected by the Leicestershire County Council Pension Fund to manage a £35m (€42m) infrastructure investment mandate.