Landmark Partners, a Connecticut-based secondaries firm, made a $350 million preferred-equity investment in Stonepeak Infrastructure Partners, according to an internal memo seen by Infrastructure Investor.
Stonepeak co-founders Mike Dorrell and Trent Vichie sent the memo to limited partners of the firm’s third infrastructure fund, which closed in July on $7.2 billion, letting them know an “immediate intended use” of Landmark’s investment will be to increase Stonepeak’s GP commitment to $108 million. That takes Stonepeak’s GP commitment to the full amount allowed, 1.5 percent of Fund III’s size, up from $72 million.
The remaining capital will go towards expanding Stonepeak’s infrastructure credit business, the memo states, “and for similar smaller investments into opportunities that may fall outside of the investment mandate of our existing funds”. Stonepeak, which manages $15.8 billion in assets after raising three infrastructure funds – and fully deploying two of them – launched a credit business for the asset class last year.
“Doing this, we believe, provides Stonepeak’s infrastructure funds with an advantage in terms of information flows and counterparty engagement. These credit and related efforts will continue to be separately staffed and ancillary to the main infrastructure funds,” the founders wrote in the memo.
Landmark’s investment is broken into a $100 million upfront payment and $250 million that Stonepeak can call at any time. The memo adds that the investment can be “best characterised as a structured preferred-equity transaction.” It says the investment is non-recourse to Stonepeak, and Landmark is not taking an ownership interest in the firm.
A source familiar with the transaction told Infrastructure Investor the structure gives Stonepeak “flexibility” in how the investment is used. That person declined to say if other incentives were included for Landmark.
Landmark did not respond to a request for comment, and Stonepeak declined to comment.
The deal differs from another recent preferred-equity transaction involving an infrastructure firm. In May 2017, Goldman Sachs acquired a 12 percent minority interest in energy buyout firm Riverstone Holdings for up to a $500 million investment. The deal valued Riverstone at $4 billion.
Stonepeak held one of the largest closes of the year for an infrastructure fund in July. The firm has already inked two deals from that vehicle, including backing cold storage transportation company Lineage Logistics and the other a midstream joint venture with US-based Targa Resources Corporation. The fund has a five-year investment period.
Check out our September keynote for more on Stonepeak, its third infrastructure fund and an in-depth look at how Dorrell and Vichie run the firm.