CapDyn launches debt platform with an eye toward fundraising in 2019

Sources confirm the manager is considering raising an infrastructure vehicle next year.

Capital Dynamics has hired Paul Colatrella from Ares Management to lead investments in infrastructure debt, as sources say the Swiss firm is considering raising a fund focused on that strategy.

The firm announced plans on Tuesday to build a credit business that invests in power and energy infrastructure, including in thermal and renewables assets. Capital Dynamics has brought on Colatrella to lead the initiative, having worked for 25 years in the sector – including the past six years as managing director of Ares’ power generation credit team.

Two sources familiar with Capital Dynamics’ thinking told Infrastructure Investor the firm is hoping to begin raising an infrastructure debt fund in early- to mid-2019. The firm declined to comment on its fundraising plans, though.

John Breckenridge, who heads Capital Dynamics’ nearly $3.5 billion clean infrastructure group, and who Colatrella reports to, told Infrastructure Investor the reason for the new strategy is to give investors access to assets the firm’s equity funds can’t invest in. He said the equity business invests in contracted power assets, but he’s seeing a lot of “lightly” contracted or uncontracted assets investors still want exposure to.

“The way we can get them exposure with a similar kind of risk and return is instead of using equity, we use Paul’s product in the debt stake,” Breckenridge said. “It’s the same kind of investors, same kind of strategy. It just allows us to participate in projects that we couldn’t otherwise participate in.”

According to Colatrella, the firm is looking to start investing in individual deals as soon as this summer, likely committing between $50 million and $200 million. He said the Capital Dynamics infrastructure debt team will first target the North American market but then “see where market opportunities lead us”.