Orange County Employees Retirement System, Santa Ana, Calif., committed a total of $260 million to two infrastructure funds and up to $250 million to a Treasury inflation-protected securities index fund, said Robert Kinsler, spokesman for the $13 billion pension fund, in an e-mail.
OCERS committed $130 million each to Argo Infrastructure Partners’ new infrastructure fund and BlackRock Global Renewable Power Fund II. Both commitments are subject to additional due diligence.
Argo’s new fund will be set up as a co-investment vehicle similar to its first fund, the $500 million Argo Infrastructure Alliance Energy North America, a holding company in which the $192.2 billion California State Teachers’ Retirement System, West Sacramento, and APG Asset Management, each committed $250 million. APG manages the assets of the €402 billion ($435 billion) Stichting Pensioenfonds ABP, Heerlen, Netherlands. Mr. Kinsler declined to provide further information.
This is OCERS’ first investment with Argo. The fund is expected to invest primarily in core asset classes such as contracted renewable and thermal power generation, regulated transmission and distribution utilities, and contracted pipeline and other midstream assets in the U.S. and Canada.
BlackRock Global Renewable Power Fund II has a $1 billion fundraising target. The new fund will invest in utility-scale wind and solar projects. The fund’s portfolio is expected to be roughly 85% solar and 15% wind, with about a third of the projects being in the construction phase. About 60% of the portfolio will be invested in the U.S., with the rest in Europe and Canada.
Separately, OCERS committed up to $250 million in the BlackRock Treasury inflation-protected securities index fund subject to final due diligence and concurrence of both OCERS consultants, Meketa Investment Group and Pension Consulting Alliance.
OCERS had invested in TIPS in the past but discontinued the investment strategy when interest rates dropped with declining inflation expectations. OCERS is investing in TIPS now to guard against an uptick in inflation, according to a staff report. TIPS are also expected to earn higher returns than U.S. Treasury bonds.