UBS AG (UBS) through its asset management wing – UBS Global Asset Management – entered into a global infrastructure partnership with U.S.-based CalPERS (The California Public Employees' Retirement System). The partnership deal has been struck at $500 million.
CalPERS is one of the major public pension funds in the U.S., with assets of around $300 billion. Health and retirement benefits of 3,064 public school, local agency and state employers are administered by the company. The infrastructure assets of the company currently stand at around $1.8 billion.
The Partnership
Of the total amount, UBS will inject $15 million to the newly formed firm while CalPERS will infuse the remaining $485 million. Also, UBS will serve as a managing member of the new venture to be known as – Golden State Matterhorn, LLC. The partnership will focus on making strategic infrastructure investments in the U.S. as well as developed markets across the globe.
Through investments in the public and private infrastructure space, particularly in transportation, power, energy, and water sectors, the CalPERS Infrastructure Program strives to deliver stable, risk-adjusted returns to the total fund. During fiscal 2014 (ended Jun 30, 2014), the infrastructure investments returned 22.8%, outpacing the benchmark of 17.2%. Also over the past five years, it returned 23.3%, substantially above the benchmark of 16.6%.
Our Viewpoint
The latest move by UBS seems to be in line with its investments goals. The Swiss banking giant not only will have the opportunity to strengthen its presence in the U.S. infrastructure space but in the global market as well.
Further, we remain optimistic about the success of the venture owing to CalPERS' impressive track record.
UBS currently holds a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the foreign banks space include Argentina-based BBVA Banco Franc (BFR), South Korea’s Shinhan Financial Group Company Ltd (SHG) and Brazil-based Itau Unibanco Holding SA (ITUB). All these stocks sport a Zacks Rank #1 (Strong Buy).
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