Ardian Fund V becomes largest Europe-focused infra vehicle at €6.1bn

Almost 50% of the LPs came from Asia and the Middle East, with Ardian’s head of infrastructure ‘surprised’ at the €12bn demand for new European fund

Ardian has closed its fifth European infrastructure fund on €6.1 billion, more than doubling its previous European effort of €2.6 billion.

The close has come six months after the Paris-based fund manager launched the Ardian Infrastructure Fund V, which is the largest Europe-focused infrastructure fund raised to date. It is Ardian’s sixth infrastructure vehicle, following the close of the $770 million Americas fund last year.

Ardian’s head of infrastructure Mathias Burghardt told Infrastructure Investor that the company has reduced the European LP base in its 2016-vintage Ardian Infrastructure Fund IV from 58 percent to below 45 percent. The proportion of Asian and Middle Eastern investors in the fund has grown to just below 40 percent, out of a total of 125 investors. Although the LP base from the Americas has remained broadly stable, Burghardt said there was a far greater presence from US pension plans and that the firm’s Americas fund had “certainly played a role” in this.

Investors in the latter fund include the Employees Retirement System of Texas (€100 million), Taiwan Life Insurance (€40 million) and Cathay Life Insurance (€40 million).

Burghardt said several LPs were investing in infrastructure for the first time. Asked why they had chosen Ardian, he responded: “Many GPs in our industry are widening the definition of infrastructure. We remain very loyal to our initial strategy, which is core infrastructure assets in transport and energy.”

Burghardt added that Ardian had received demand for Ardian Infrastructure Fund V totalling up to €12 billion and admitted the group was “surprised how huge the demand was”. Infrastructure Investor reported this month that LPs had concerns that the fund would be too large and had pressured Ardian to keep it below €7 billion, with the vehicle’s hard-cap described as “fluid”.

“Our strategy is to buy and build companies, and a larger fund allows us to continue this,” Burghardt said. “We thought any fund up to €7 billion was the perfect size. We had a debate with some LPs. Not many of them, but some of them by principle are always reluctant to have too big an increase between two fund generations. We found this compromise, which we think is good in having a fund big enough to allow us to chase the assets we want to pursue, to implement the buy-and-build strategy and still increase the fund size in a way which displays the speed of deployment of capital.”

Ardian Infrastructure Fund V is targeting a net IRR of 10-13 percent, with a hurdle rate of 7 percent and a 15 percent carry. According to pension documents seen by Infrastructure Investor, fees are set at 1 percent for commitments below €100 million, 0.9 percent for commitments between €100 million and €200 million, and 0.8 percent for those over €200 million.

Burghardt confirmed that Ardian expects to announce its first deal, in the renewables sector, over the coming weeks. The firm continues to mainly target Western European markets, although it is now seeing further opportunities in Scandinavia.