Tuesday, August 05, 2008

Texas General Land Office gambles $200 million of the Texas Permanent School fund on Macquarie, Goldman Sachs (toll road) infrastructure funds.

Texas Land Office commits $100 million to infrastructure fund

August 5, 2008,

By Robert Elder
Austin American-Statesman
Copyright 2008

The Texas School Land Board today voted to invest $100 million in an infrastructure fund run by Goldman Sachs. (To recap the hierarchy of these investments: The school land board approves investments for the General Land Office, which does real estate and land investing on behalf of the Texas Permanent School fund. Income from the PSF helps pay for public education. Got it?)

Rusty Martin, deputy commissioner for funds management, told the land board that the Goldman fund will top out at about $7.5 billion and invest primarily in transportation and utilities infrastructure.

The generally dismal state of global infrastructure has spurred great interest in infrastructure as an investing asset class. The need is obvious, from bridge collapses in the U.S. to China’s goal of adding the equivalent of the U.S. highway system in the next few years.

The area has also drawn the attention of Texas lawmakers such as Sen. Steve Ogden, chairman of the Senate Finance Committee. The Bryan Republican has floated the idea of Texas public pension funds as a source of capital for infrastructure in the state. If the funds are investing — or contemplating investing — in infrastructure deals all over the world, Ogden reasons, why not put some of that money work in Texas?

Until recently, Texas public pensions have not committed large sums of money to infrastructure. That’s changing. In May, the $113 billion Teacher Retirement System of Texas committed $300 million each to infrastructure funds run by Morgan Stanley and Babcock & Brown.

The Goldman Sachs investment is the General Land Office’s second infrastructure deal. The GLO in February committed $100 million to Macquarie Infrastructure Partners II. Macquarie Group Ltd. is an Australian investment bank.

© 2008, Austin American-Statesman:www.statesman.com

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