In one of the largest single infrastructure investments by a US fund manager, CalSTRS has awarded a $500 million mandate to Australian manager, IFM, to gain exposure to the global infrastructure market. 

The California State Teachers' Retirement System (CalSTRS) has selected Industry Funds Management (IFM) to manage an infrastructure mandate up to $500 million to invest in a diversified portfolio of core infrastructure assets in North America and Europe across a range of sectors.

Broken into two tranches, an initial $300 million will be invested immediately in core infrastructure assets such as regulated utilities, transport and other cash-yielding, inflation-hedged infrastructure investments. A second tranche of $200 million is expected to be invested within the next 18 months.

Brett Himbury, IFM chief executive, said CalSTRS was their ideal investment partner for IFM's collective approach to direct investing in infrastructure.

"They are highly aligned with IFM being long-term institutional investors absolutely focussed on optimising the net returns for members. CalSTRS will sit well alongside other institutional investors, including some of Australia's leading pension funds and other significant US and European pension plans."

Chris Ailman, CalSTRS chief investment officer, said the firm selected IFM for its investor-owned structure and ability to manage infrastructure businesses through economic cycles.

"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, who have pioneered this sector and have leveraged the benefits of scale to deliver returns to their members."

IFM manages over U.S.$31 billion across four asset classes - infrastructure, private equity, debt investments and listed equity portfolios. IFM invests on behalf of institutional investors and is owned by 32 major not-for-profit Australian superannuation funds.