United States public pension fund the California State Teachers' Retirement System (CalSTRS) has awarded Industry Funds Management (IFM) a mandate of up to $500 million for its Global Infrastructure Fund.
The pooled fund invests in core infrastructure assets in North America and Europe across a range of sectors.
The mandate will be invested in two tranches. The first $300 million will be invested immediately, while the second tranche of $200 million is expected to be invested within the next 18 months.
IFM could not say whether the investment in the fund would be expanded beyond the $500 million commitment.
"It is a relatively early exposure for CalSTRS, so we are not sure what their future plans are," IFM chief executive Brett Himbury said.
The CalSTRS mandate involves core infrastructure assets, such as regulated utilities, transport and other cash-yielding, inflation-hedged infrastructure investments.
The investments would help CalSTRS address some of its portfolio issues that emerged from the global economic crisis, the US pension fund 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," CalSTRS investment committee chairman Harry Keiley said.
"This type of investment aligns our goals as patient long-term investors with both the jobs generation and infrastructure improvement our economy needs."
CalSTRS chief investment officer Chris Ailman said it was a relatively new sector for the fund.
"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," Ailman said.
IFM has had a presence in the US for five years and expanded its business development team last year.
Himbury said the mandate win was partly a reflection of the expanded resources.
The firm is planning to add a new investment director to its US team shortly, he said.
