Arjun Infrastructure Partners has closed its maiden fund after raising €1 billion for its Infrastructure Alliance Europe vehicle.
The London-based manager, which was founded in 2015 by JPMorgan Asset Management’s former head of European infrastructure Surinder Toor, has previously invested on a club-deal basis with its group of about 20 institutional investors.
However, it has now brought together Swedish pension schemes AP4 and IMAS Foundation, Denmark’s Industriens Pension and KLP, Norway’s largest pension fund, into its first formal fund structure. The fund is believed to be targeting core infrastructure assets in Western Europe, excluding the UK, with several members thought to already be well-exposed to the UK, a source close to the fund told Infrastructure Investor.
“We found a way to get together with high-quality partners that share a common view of the world in terms of what we look for in sustainability and the long-term view,” added Andreas Jensen, senior portfolio manager for alternatives at AP4.
Earlier last month, Arjun acquired from Copenhagen Infrastructure Partners a 49 percent stake in a Spanish wind portfolio consisting of 12 projects with a cumulative capacity of 487MW. It is believed the deal represents the first to be made by the new fund. Construction of the portfolio is close to completion and it has a debt package worth about €380 million to draw down once it becomes operational, according to a statement from CIP.
Jensen said the four LPs in the fund have a much greater influence with regards to what kinds of deals the vehicle pursues than they would do in many commingled funds.
“We will work much closer with Arjun as a manager, in terms of deciding which deals are acceptable to us as a group and what we are looking for,” he explained. “We will all work together to form the portfolio in line with what we are trying to achieve. In a commingled fund, the manager has a fully discretional mandate, but this is more of a collaboration.”
As well as the foundation of Nordic infrastructure platform Polhem Infra alongside AP1 and AP3 in 2019, AP4 has also invested in infrastructure funds managed by EQT, Infranode and Infracapital. Reforms to the Swedish pension system in 2019 allowed for greater freedom to invest in unlisted direct investments, although Jensen said the Arjun-managed fund helps achieve some of these goals without the hiring of an in-house team.
“We are trying to have as many of those benefits of being able to get closer to the assets without having our own organisation in place,” he outlined. “This means keeping the cost and fee structure in a way which is equated to returns. Compared to a regular fund, this is something important when putting in place this structure.”