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Alaska Permanent Fund expands infra definition to include agri, timber

Alaska Permanent Fund Corporation has approved a $400 million allocation to infrastructure for the upcoming fiscal year and is set to add agri and timber assets to its portfolio for the first time.

The $56.4 billion Alaska Permanent Fund Corporation (APFC) is set to start investing in agriculture and timber for the first time after expanding its definition of infrastructure at a recent board meeting.

The board of trustees met last week to amend the fund’s investment policy and approve its allocations for 2016. The board decided to expand its infrastructure allocation to include “other real assets that have low correlations with the fund’s other major asset classes”, according to an announcement.

“This change [will] allow staff to seek out any investment that has similar risk and return characteristics as infrastructure, rather than be limited to a rigid focus on traditional infrastructure sectors,” reads Wednesday’s release. The addition to the infrastructure portfolio can include agri and timber and leaseable hard assets such as aircraft or railcars.

APFC previously had no exposure to agri and timber, Laura Achee, a spokesperson told Agri Investor in an email.

The fund has allocated $400 million to infrastructure for the fiscal year 2016 – the same allocation as in 2015 – to be split between co-investments and infrastructure funds with a maximum of $200 million for co-investments. There is a further $200 million available for investment into “compelling opportunities”, said Achee.

 

The infrastructure allocation is part of a larger 19 percent target allocation to real assets which includes real estate.

Other funding made available for 2016 included $900 million for private equity, which accounted for 6 percent of total asset classes as of 2013, also split between co-investments (limited to $225 million) and private equity funds. As with infrastructure, an additional $200 million may be added to the total private equity allocation if warranted. Lastly, $100 million was approved for investments in the private credit sector.

Lazard Asset Management, Oaktree Capital Management, Bridgewater Associates and Goldman Sachs Asset Management are among the investment managers for the fund’s alternative investments portfolio, according to APFC’s website.

Achee said the fund has not yet hired any external managers for agri and timber specifically.

While APFC is still new to agri and timber investing, its local peer the Alaska Department of Revenue has been investing in the sector since 2006 and is aiming to invest 25 percent of its portfolio in farmland, chief investment officer Gary Bader told Agri Investor in March.