New Jersey Division of Investment is considering setting up a $500m (€462.1m) separate account with StepStone Group, targeting investments in the infrastructure and energy transition sectors.

The pension fund disclosed in a meeting document that the proposed investment will give it a 99% ownership stake in the separate account, with the option to increase the commitment annually. StepStone is expected to invest $5m out of its capital to own a 1% stake in the relationship.

According to New Jersey Division of Investment, the separate account will focus initially on co-investing in infrastructure projects.

It may also pursue partnerships, secondary investments, and selective primary funds, primarily in North America, but with potential expansion to the UK, Western Europe, Asia, and select OECD countries. The target net return is at least 10%.

New Jersey Division of Investment is currently underweight its target allocation and its exposure to infrastructure and energy transition investments.

The pension fund is also considering making a $150m commitment to KSL Capital Partners Tactical Opportunities Fund II, a real estate fund seeking to raise $1bn to invest in credit, debt securities, equity and equity-linked securities globally.

The KSL Capital Partners is expected to generate 13% to 15% internal rate of returns as it mainly invests in US hotels and resorts.

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