As investors have added infrastructure to their investment menu, some of the consultants that serve them also have added expertise.
So far, much of the infrastructure work is being done by general consultants and real estate consultants that have added the expertise. But a few specialist boutique consultants are starting to pop up around the world.
New Mexico Educational Retirement Board, Santa Fe, turned some heads when it hired Toronto-based specialist Caledon Capital Management Inc., as its infrastructure consultant.
“Caledon Capital was chosen due to their teams' experience investing directly in infrastructure as principals,” said Mark Canavan, senior portfolio manager for real assets with the $9.1 billion New Mexico board. “NMERB staff intends to recommend creation of a co-investment platform, and staff believes a consultant with highly differentiated experience is required should co-investment opportunities arise.”
Caledon's infrastructure consulting executives have experience assisting institutional investors including the Abu Dhabi Investment Authority and Ontario Municipal Employees Retirement System, make direct investments and co-investments in infrastructure, Mr. Canavan said.
Insiders say the emergence of specialty infrastructure managers is part of the maturation of the asset class.
“It's an interesting trend,” said Mark Weisdorf, CEO of infrastructure investments, J.P. Morgan Asset Management. New York.
“These types of trends are normal. As a newer strategy starts to grow, we see first co-investing and then the hiring of boutique consultants,” Mr. Weisdorf added.
But the formation of infrastructure specialist consultants is in its infancy, especially in the United States.
“There's not many boutiques just yet,” he said. “There have been some boutiques formed, but most of them are in Australia, the United Kingdom and Canada.”
So far, much of the infrastructure investment work has been done by general consulting and real estate consulting firms.
“Some of the larger consulting firms are putting us (infrastructure) under their real assets group,” said Larry Antonatos, director, global equities, in the Chicago office of Brookfield Investment Management Inc.
General consultant Callan Associates Inc. recently renamed its real estate group to real assets to reflect its expertise in infrastructure, timber and agriculture consulting.
Meketa Investment Group Inc. has been providing infrastructure investment consulting services for the California Public Employees' Retirement System, Sacramento, since 2009. Hewitt EnnisKnupp also has assisted clients with infrastructure mandates. Pension Consulting Alliance is the California State Teachers' Retirement System's infrastructure consultant.
Real estate consulting firms Townsend Group and Courtland Partners both offer infrastructure consulting. Courtland Partners was New Mexico Educational's first infrastructure consultant before being replaced with Caledon earlier this year.
Real estate consulting firm The Townsend Group has been providing “formal advice to dedicated infrastructure mandates on our clients'” behalf since 2006, Anthony Frammartino, partner at the Cleveland-based real estate consulting firm, wrote in an e-mail response to questions.
To date, close to $5 billion of its total $120 billion of assets under advisement are in infrastructure programs, he wrote.