Alaska Retirement Management Board to invest in Italian toll roads

The Alaska Retirement Management Board has added $225m (€163.5m) to its real assets portfolio through investments in infrastructure and real estate.

The pension fund has selected Lazard Asset Management and Brookfield Investment Management as its separate account managers to manage public infrastructure investments.

Each was awarded an allocation of $75m.

This decision was the outcome of an infrastructure manager search conducted by Callan Associates. 

The other finalist in the search was RARE Infrastructure.

In a board-meeting document, Matt Landy, senior vice-president and analyst at Lazard, cited “some very interesting opportunities” in Italy, particularly in the toll road sector. 

He pointed out that they had performed well through the Italian recession and were trading at huge discounts to intrinsic value.

Lazard will aim to generate defensive, low-volatility returns that exceed inflation by placing capital in a range of global companies considered to be preferred infrastructure. 

This would include regulated utilities, toll roads, airports and broadcast towers. 

These entities are monopoly-like assets that tend to generate a stable, consistent pattern of return, it said.

Lazard looks to outperform inflation by 5% over rolling five-year periods.

Brookfield plans to invest in four major regions of the world – Europe, North and South America and Asia Pacific. 

It plans to focus on transportation, energy, water and communications.

In a board-meeting document, it said the European market appeared to be bottoming but added that investors needed to remain wary of the periphery. 

The kinds of infrastructure that has bottomed, it said, include airports, seaports and toll road traffic.

Alaska Retirement also made a $75m commitment into the KKR Real Estate Partners Americas commingled fund.

Steve Sikes, state investment officer at Alaska, said: “We felt the commingled fund presented a good higher-return complement to our existing real estate portfolio. 

“The targeted returns for the fund are in a range of 16% to 20%.”

All of the capital will be invested in North America and Western Europe. 

The capital will be invested in a number of strategies including property-level equity, debt, special situation transactions and businesses with large real estate holdings.

Sikes was non-committal as to whether Alaska would invest more capital into real estate in 2014. 

“We evaluate real estate opportunities as they present themselves,” he said. “We may make additional commitments if we find a strategy compelling.”