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September 17, 2011

CalPERS to Quadruple Investment in California Infrastructure
    by Robert Kropp

Pension fund earmarks $800 million for investments of at least $150 million in infrastructure projects that support essential community services. -- The nation's largest public pension fund is planning a significant increase in its investment in California's infrastructure.

The California Public Employees' Retirement System (CalPERS), with $227 billion in assets, annou nced this week that it plans to increase infrastructure investment in California from its current level of $203 million to $800 million over the next three years.

The decision, which is part of a plan by CalPERS to increase its global investment in infrastructure to $5 billion, followed by a few days President Obama's speech calling for jobs creation through improvements in infrastructure, and occurs at a time when budget constraints are forcing many state and local governments to seek out private partners for infrastructure development.

CalPERS said that its investments in California would be of at least $150 million per project, and focus on qualities such as "minimal competition, stable revenues and returns, low operating risk and strong credit."

Rob Feckner, President of the CalPERS Board of Administration, stated that while the pension fund's first priority will be financial returns, its secondary goal will be "supporting essential community services that are crucial to continued economic development, a safe environment, and healthy schools and communities."

The areas of infrastructure in which CalPERS plans to increase its investment include transportation, energy, natural resources, utilities, water, and communications.

George Diehr, Chair of the CalPERS Investment Committee, stated that the investments sought by the fund will both meet its risk-return objectives and "have the extra benefit of creating jobs and ultimately improving the economic climate."

In July, CalPERS anno unced that its return on investment for the 2010-2011 fiscal year was 20.7%, its strongest annual performance in 14 years.

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