Asterion makes first-time fundraising look breezy. It isn’t

Ex-KKR infra co-head Jesús Olmos’ year-old outfit is the exception. In reality, a significant number of LPs are unwilling to commit to first-time vehicles. Here’s why Asterion was successful.

How long does it take to raise a €1.1 billion, mid-market focused, first-time infrastructure fund? A little over a year, apparently.

That’s if you’re Asterion Industrial Partners, the Madrid-based manager founded by ex-KKR infrastructure co-head Jesús Olmos. As we wrote on Tuesday, the firm closed its debut infrastructure fund on its revised €1.1 billion hard-cap, becoming Spain’s “largest private equity fund” in the process.

Here’s a quick recap: Asterion was launched in September 2018 by Olmos and a group of former KKR partners. In November, it started fundraising for the now-closed Asterion Industrial Infra Fund I. Four months later, it held a first close on €520 million. By mid-November, commitments increased to €901 million, already ahead of the fund’s €850 million target. Following agreement from its LPs, it closed €100 million above its hard-cap on 21 January. It’s also secured around €500 million for co-investments.

Not bad for a rookie outfit, which of course Asterion kind of isn’t. And neither is its fundraising prowess typical of first-time funds, despite the buoyant fundraising market we’re living in.

In the wider world, most LPs actually don’t want to invest in first-time funds. Or at least, not the LPs we speak to. In our soon to be published LP Perspectives Survey 2020, where we quizzed 146 institutional investors, 40 percent of investors in infrastructure funds said they are planning to increase their total number of GP relationships over the next 12 months. However, 54 percent do not plan to invest in any first-time vehicles. Key concern: mixed performance from new entrants.

That concern offers the first hint as to why Asterion has been successful. Olmos has 34 years’ infrastructure experience, including a decade as a founding member of KKR’s infrastructure practice. His two co-founders – Winnie Wutte and Guido Mitrani – are also former KKR infrastructure alumni. That’s a founding team with a long track record of working together and a fat Rolodex.

The latter is evidenced by the speed with which Asterion has been investing. The manager announced its first deal at first close. Eight months later, when it disclosed it had beat its fundraising target, it added two other deals. At final close this week, that number went up to five, with a sixth near conclusion. That will take the fund to an impressive 60 percent committed not long after final close.

Another clue to Asterion’s success comes from its ability to operate in markets others might have a harder time accessing. Although the manager is resolutely pan-European – transactions closed to date have spanned the UK, France and Spain, with a deal in Italy to close in April – its ability to target the southern European mid-market arguably offers it a competitive advantage.

Olmos admitted as much when he spoke to us last year. “There is a lack of international GPs that have a focus on those markets – Spain, Portugal, Italy. I think we are sort of filling the gap and I think we can really differentiate ourselves in those markets.”

That helps Asterion stand out from the increasingly crowded European mid-market space, even if the team would probably point out their industrial chops are an equally important differentiator.

Finally, the Madrid-based manager hasn’t just been quick to fundraise and invest – it was also quick to assemble its team. When we caught up with Asterion last March it was already 15-strong (it’s now 16). Olmos told us at the time, LPs were impressed with how quickly this first-time infrastructure fund got their, ah, infrastructure together, with a presence in London and Paris in addition to its Madrid headquarters.

All of which means Asterion is off to a promising start. But their example should also give heart to other first-time outfits. With the right mix of skills, track record and differentiation, LP wallets will, indeed, open.

Ladies and gentlemen start your spin-out engines.

Write to the author at bruno.a@peimedia.com