CalPERS Picks Infrastructure Consultant

According to the announcement, Meketa, founded in 1974 and based in Westwood, Massachusetts, provides consultant services for approximately $70 billion in institutional assets. Meketa has been evaluating investment strategies for transportation, ports, energy, water, communication and other infrastructure projects since 2006. 

CalPERS already has committed $700 million to infrastructure, which is part of the inflation-linked asset class launched in 2008. Besides infrastructure, the other class components are commodities, forestland and inflation-linked bonds. 

Additional investments are under review as the infrastructure program approaches its allocation of 1.5% of total CalPERS market value by the end of 2010, according to the announcement.  The discretionary range around that target represents a total potential commitment of up to $7 billion over a five-year horizon. The performance goal is 5%, above the Consumer Price Index (CPI), a benchmark for the rate of inflation, according to CalPERS. 

Finalists Listed

“All four finalists for this primary consultant award had a lot to offer,” said George Diehr, Investment Committee Chair. “However, Meketa’s proposal, presentation and responses to our questions demonstrated their experience and skill in providing infrastructure investment advice to large institutional investors. Meketa will give us a fresh look at this relatively new asset class.” 

In addition to Meketa, the other finalists were Wilshire Consulting, Pension Consulting Alliance and R.V. Kuhns & Associates.  

CalPERS says that its staff will prepare a formal letter of engagement for a renewable one-year term for Meketa Investment Group, with services scheduled to begin on or around January 1, 2010. Meketa reduced its initially proposed annual base fee and itemized project costs of $125,000 by 15% to meet the State of California directive to reduce State contract costs. The new proposed annual base fee is $106,250. 

Meketa and the other three finalists were among nine consultants that submitted proposals to be the lead infrastructure consultant. All of the consultants and two others will continue in a spring-fed pool of 11 infrastructure consultants that CalPERS can tap as needed for work related to strategy, analysis, comments and other assistance. 

CalPERS is the nation’s largest public pension fund with approximately $200 billion in market assets.