REAL ESTATE- The North Dakota State Investment Board has awarded a $100m (€79.4m) commitment to the JP Morgan Infrastructure Investment Fund.
The pension fund was looking to place some capital into a commingled fund that focused on infrastructure investing. Its Chief Investment Officer Steve Cochrane said, "We think that a commingled fund of this type will give our pension fund more diversification by investing in different assets than we have owned in the past."
North Dakota State did look at several infrastructure commingled funds. Cochrane said, "We liked the JP Morgan fund because of its open-ended structure. Some of the other infrastructure funds were closed-ended. I think that since many of the transactions in the fund have 99-year leases, it’s important to invest in an open-ended commingled fund."
JP Morgan Asset Management is the real estate manager of the JP Morgan Infrastructure Fund. The initial capital raise for the fund should be around $1bn.
North Dakota State decided to put its commitment into its fixed income allocation. It now has invested 19% of its portfolio in fixed income. It has $3.6bn of total assets in its pension trust fund.
Pension funds around the country are putting infrastructure investments in either fixed income, real estate or alternative asset classes. Cochrane said, "We think that for us, this investment works more as a fixed income kind of asset."
North Dakota State hopes to achieve a low teens kind of leveraged IRR. This yield factors in a long-term holding period.
JP Morgan will be investing in a variety of assets. These would include bridges, toll roads, energy facilities and waterway systems. Many of these operations will be owned on 99-year leases.
Transactions for the commingled fund will be considered in a variety of countries around the world. This would include the United States, Canada, Western Europe and Australia.