London-listed firm 3i Group has secured a €155 million first close on its unlisted European Operational Projects Fund.
The fund will target PPP projects across western and southern Europe, with a particular focus on the transport and social infrastructure sectors. The vehicle has a target of €400 million, a spokeswoman for the firm told Infrastructure Investor.
The initial contributions were garnered from a group of six European LPs comprising pension funds, insurance companies and fund of funds, although the firm declined to disclose the identities of the cornerstone investors. A commitment of €40 million has also been provided by 3i Group while the company has also seeded the fund with 11 assets held by 3i Infrastructure, although it declined to state the identity of these projects.
While the fund will target PPP infrastructure projects and be managed by its infrastructure team, the fund falls under the remit of 3i Group as opposed to the separate 3i Infrastructure company. The spokeswoman explained this was due to the PPP fund’s expected returns being lower than the 8-10 percent targeted by 3i Infrastructure over the medium term. In addition, the fund’s target of operational assets does not fall under 3i Infrastructure’s aim of investing in mid-market economic infrastructure opportunities and greenfield projects.
“We believe the European operational PPP market presents a compelling investment opportunity for institutional investors seeking long-term yield,” explained Phil White, who recently became 3i’s sole head of infrastructure following the departure of Ben Loomes. “We are very pleased with the interest received so far from both new and existing 3i investors.”