California State Teachers' Retirement System, West Sacramento, is developing a multibillion-dollar global syndicate for infrastructure investing, Chief Investment Officer Christopher Ailman announced Tuesday at a Washington summit on infrastructure investment.
“We are forming a consortium of public pension funds to invest in North America, similar to the IFM (Investors) model,” Mr. Ailman said. He was speaking at the Build America Infrastructure Investment Summit, convened at the Department of Treasury to encourage private-sector investment.
Melbourne, Australia-based IFM Investors invests on behalf on institutional investors and is owned by 30 major Australian superannuation funds. It sponsors one of the few open-end infrastructure funds.
Mr. Ailman did not elaborate, and further details were not available from CalSTRS.
But Mr. Ailman cautioned against mandating such investments by public pension funds. “Don't you dare mandate anything to us. Some of the worst investments over the years are the ones that were mandated. If you make the deals attractive, the capital will flow. I guarantee it,” he told attendees. He recommended that infrastructure investors take a page from municipal bond issuers, which collaborated on standardized rules. “The infrastructure industry needs to create its own rulemaking board,” Mr. Ailman said.
Pension funds at the summit included CalSTRS, the $26.1 billion Employees Retirement System of Texas, the $13.1 billion Illinois State Board of Investment and the C$140.8 billion (US$131.1 billion) Ontario Teachers' Pension Fund.
Money managers attending included BlackRock, Blackstone Group, Carlyle Group, Goldman Sachs, KKR, Morgan Stanley, Oaktree Capital, Brookfield Asset Management, IFM Investors, J.P. Morgan Asset Management, Macquarie Infrastructure Partners, Meridiam and Ullico.
CalSTRS's total target allocation to infrastructure is $4 billion, of which only $1.25 billion is invested as of June 30, out of $186.6 billion in the total portfolio.