Antin closes 2020’s second-largest fund on €6.5bn hard-cap

Antin Infrastructure Partners has closed the second-largest infrastructure fund this year after reaching its €6.5 billion hard-cap for Antin Infrastructure Partners IV.

As reported by Infrastructure Investor in March, the firm had been expecting a summer close on the vehicle’s hard-cap after it was believed to have raised about €3.5 billion, as coronavirus began to take hold in Europe. However, managing partner Mark Crosbie said this only affected the nature of fundraising, rather than fundraising itself.

Sébastien Lecaudey, investor relations partner at the firm, added: “We ended up being significantly oversubscribed. Investors realised there was a lot of resilience in Antin’s portfolio.”

Antin had been raising fund IV since late 2018, despite raising its predecessor vehicle in less than five months in a one and done close.

“We decided to have a long fundraise to bring in specific investors, which we’d never had before, because fundraising had been too quick and some investors have longer processes,” Lecaudey said.

One investor in recent months is Swedish pension fund Alecta, which said it committed €250 million to the fund in April. The pension had made its first investment in infrastructure about five months earlier. Taiwanese insurance group Fubon Life said earlier this month it had invested €55 million. Lecaudey said about 40 percent of the fund’s LPs came from outside Europe.

A minimum of 70 percent of the vehicle is to be invested in Europe, with up to 30 percent to be invested in North America. The fund’s sole investment to date is the acquisition of Veolia’s US district heating business for $1.25 billion, its second deal in the region. Crosbie said the deal ensures the fund is about 10 percent invested at close.

“At the moment, we’re seeing good quality dealflow on both sides of the Atlantic,” said Crosbie. “We’re looking at transactions in telecoms, social infrastructure and we’re involved in some processes in sub-sectors we haven’t previously invested but have looked at those sectors for quite some time. These are a mix of auctions and proprietary deals.”

‘Cautious’ investments

Antin’s last involvement in the renewables sector was its 2011 investment alongside DWS in concentrated solar plants in Spain, which was hit by retroactive tariff cuts in the years following, although Antin was awarded €112 million in compensation for this in 2018. However, Crosbie has not ruled out re-entering the sector.

“We’ve continued to look at plenty of renewables opportunities in the intervening period but we just haven’t found the right opportunities,” he explained. “We are looking at some renewables transactions but it’s too early to say whether we will get those over the line. You’re more likely to see us buy a platform-type of opportunity where we think we can make a significant difference.”

Crosbie said the pandemic has offered new data points to stress test assets in ways never seen before and that Antin has to assess if new opportunities are appropriate for its 10-year fund model, which typically targets gross returns of 15 percent.

“This inevitably makes you more cautious about investing in certain sub-sectors, such as airports,” he said. “You have to think very carefully about whether it makes sense in a fund with a defined life. It might make sense if you were investing with a 50-year time horizon. We’re having to think about the effect of another spike on every opportunity.”

Antin’s second €2 billion fund holds assets including UK service station business Roadchef and Italian rail station Grandi Stazioni Retail. The fund was generating a net internal rate of return of 10.41 percent as at the end of September 2019, according to the Arkansas Teacher Retirement System.

“There was a huge loss of volume but those businesses have variable cost bases and since the reopening of the UK people have been coming back significantly and faster than we expected. There hasn’t been a fundamental long-term impact and the same would be true of Grand Stazioni,” Crosbie outlined.