California Public Employees’ Retirement System, the largest U.S. pension fund, is the lead investor in a $600 million pool formed by Harbert Management Corp. for investments in North American power assets.
The fund, Gulf Pacific Power LLC, will focus on assets that require larger equity commitments than Harbert’s main power fund, Harbert Power Fund V LLC, the Birmingham, Alabama-based firm said today in an e-mailed statement. The fifth fund, which held an interim close at more than $200 million, and its investors also have the option to co-invest alongside the Calpers pool.
Harbert, the original backer for hedge-fund manager Phil Falcone, is seeking to take advantage of investor appetite for predictable cash flow by raising funds that rely on contracts to sell power plants’ capacity and energy. Harbert, which oversaw $3 billion as of Aug. 1, acquires interests in existing power assets with contracts to sell output. It can also back new development projects if long-term power sales contracts are in place, according to its website.
The $600 million gathered by Gulf Pacific Power includes commitments from Calpers and Harbert affiliates, the firm said. It expects to hold a final close on its fifth fund, which is seeking $500 million, this year. Calpers, the sole limited partner in the larger pool, also made a commitment to the fifth fund, Harbert said, without specifying the amount.
Harbert, whose first power fund began investing in 1996, focuses on assets including European and U.S. real estate, venture capital, mezzanine debt, independent power, stocks and U.S. and Australian private equity.
The Calpers’ commitment to the two funds is consistent with “strategic plan objectives of investing in high-quality infrastructure with leading partners,” Joe DeAnda, a spokesman for the pension plan, said in an e-mail.
The Standard & Poor’s 500 Utilities Index rose 0.7 percent in today’s trading. The index has climbed 6.3 percent this year, compared with a gain of 16 percent for the S&P 500.