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Apollo plans launch of third infra fund later this year – exclusive

Apollo Infrastructure Opportunities Fund III could target up to $4bn, and follows the $2.5bn final close of Fund II, in January.

Apollo Global Management is planning to launch a third infrastructure fund towards the end of this year, Infrastructure Investor has learnt.

It is understood that a target is yet to be settled on by the New York-based manager, although it is believed what would be Apollo Infrastructure Opportunities Fund III could seek about $4 billion. The fund series aims for mid-market investments across the power and renewables, midstream, digital infrastructure and transportation sectors.

The launch of the third effort would follow January’s $2.5 billion closing of Apollo Infrastructure Opportunities Fund II, a vehicle Infrastructure Investor understands was targeting about $3 billion. That fund has now committed over 50 percent of its capital, according to Apollo’s 2021 annual report, published in February, although only about $560 million had been invested by the year end, with funds to be drawn down over time.

Apollo’s strategy sees it invest across a range of solutions such as equity, preferred equity and convertible equity. Its most recent deal came this month with the fund’s only European asset – cold storage and logistics provider Primafrio – although a source told Infrastructure Investor the firm plans to imminently hire an infrastructure team in Europe to take advantage of further opportunities.

Deals prior to the fund’s closing last year included a $200 million preferred equity investment in US fibre carrier FirstDigital Telecom, and a partnership with Johnson Controls to provide energy efficiency and smart building services across the US and Canada.

AIOF II is too new for any returns to be documented, although its 2018-vintage predecessor is generating a 25 percent gross IRR and 20 percent net, according to the report.

Apollo declined to comment on the fundraising.

Apollo’s infrastructure strategy is led by co-heads Geoffrey Strong, who joined the firm from Blackstone in 2012, and Dylan Foo, who joined from AMP Capital in 2019. The group last month announced a sustainable investment plan to invest $100 billion in energy transition assets over the next decade across its various private equity, private credit, real assets and natural resources divisions.