Stonepeak considers bumping Fund III hard-cap – exclusive

The US manager - which has just clinched a US transportation deal - may increase the vehicle’s limit to $7.2bn, as it eyes a final close this quarter.

Stonepeak Infrastructure Partners is considering raising its third fund’s $7 billion hard-cap ahead of a final close this quarter, a source familiar with the fundraising confirmed to Infrastructure Investor.

The news comes as Fund III has deployed around 10 percent of its capital so far, including a recently made $500 million investment in an undisclosed, US-based transportation company. Prior to that, the firm had formed a joint venture to develop North American midstream assets with Targa Resources Corp, also through the fund.

The US-based manager has raised $6.8 billion for Stonepeak Infrastructure Fund III and has $200 million in limited partner commitments that have not yet closed, the source explained. Stonepeak is expecting around $200 million in additional commitments and is considering whether to turn investors away or increase Fund III’s hard-cap to $7.2 billion. The source added the firm expects to hold a final close this quarter – likely in June.

Infrastructure Investor reported in December the firm was facing a “scale-back situation”, meaning investors that make commitments that push the fund past the maximum amount it can raise may have to settle for less.

The firm declined to comment for this story.

Around 100 LPs have committed to Stonepeak’s third infrastructure vehicle, which is targeting a 12 percent net internal rate of return, inclusive of a 4 percent cash yield, according to pension documents. Like its predecessors, Stonepeak will use Fund III to invest between $100 million and $1 billion in North American power, water, energy, communications and transportation assets, both greenfield and brownfield.

The firm began investing Fund III after committing the final $390 million from its $3.5 billion sophomore vehicle in March, acquiring a 1.1GW portfolio of natural gas power plants from NRG Energy-owned GenOn Energy, which is in bankruptcy.

Founded in 2011 by former Blackstone executives, Stonepeak closed its inaugural infrastructure fund in 2013 on $1.65 billion. According to documents from the New Jersey State Investment Council from last autumn, that fund was generating a 14.3 percent net IRR as of March 2017.