The Oregon Public Employees Retirement Fund is investing $400m (€366m) in a North American infrastructure fund.
The US pension fund is backing Stonepeak Infrastructure Partners’s second fund.
The investor stated in a board meeting document that US infrastructure was ageing severely due to historical investment and in critical need of upgrade and replacement.
According to recent estimates, the North America infrastructure market now represents a $3bn investment opportunity.
Oregon PERF said Stonepeak produced strong results for its first infrastructure fund, with interim investment returns achieving a net IRR of 28% and an equity multiple of 1.3x.
The pension fund made a $100m commitment to the first fund in 2012.
For Fund II, the manager is aiming to raise $2.5bn, with a $3.5bn hard cap.
The manager is co-investing $20m, or 1% of aggregate capital commitments, to the fund, focusing on middle-market value-add investments.
Targeted returns for the fund are a 12% net IRR, inclusive of a 4% cash yield.
This will give Oregon PERF diversification within its existing infrastructure portfolio, which is currently tilted toward larger infrastructure assets or more opportunistic strategies.
It expects to make individual investments of $75m-300m and secure a controlling stake in the power, water, energy, communications, renewables and transportation sectors.
Oregon PERF considers the commitment to Fund II to be an anchor for its infrastructure portfolio.
To date, the pension fund has invested $1.15bn in the strategy.
The targeted allocation for infrastructure is 20-30%, or approximately $1.75bn-2.6bn, based on current net asset value.