China Everbright in $400m second close for overseas fund

Hong Kong-listed asset manager China Everbright has reached a second close on $400 million for its $1 billion vehicle targeting global mid-market infrastructure assets, a senior executive at the firm told Infrastructure Investor.

The Everbright Overseas Infrastructure Investment Fund aims to generate an internal rate of return of 10-15 percent, including a cash yield of 3.5 percent, said Richard Hu, head of the overseas infrastructure fund department and a managing director at the firm.

The closed-ended, eight-year fund targets a broad range of infrastructure sectors, including airports, telecommunications, renewables, water and waste treatment, as well as public transportation. It looks for controlling stakes in the assets it acquires with a ticket size typically ranging from $50 million to $200 million.

The second close follows a $300 million first close announced in August, with support from domestic institutional investors. Hu declined to disclose the identity of the fund’s LPs, but noted the firm itself committed 30 percent of the total fund size as seed capital.

The fund allocates around 80 percent of its capital to OECD markets, with the remaining capital to be spent in emerging economies. Hu said competition among bidders for European assets has been fierce, particularly from domestic fund managers and investors. South-East Asia, on the other hand, is supported by strong economic growth and provides a less competitive environment for quality infrastructure projects.

The fund manager is tracking three to four projects in the renewables and transport space across Europe and South-East Asia, Hu said. The fund has so far invested $150 million in two seed assets – Albania’s Tirana International Airport and a fibre-optic network business in Hong Kong.

China Everbright manages 38 funds across various asset classes including private equity, real estate, debt and equities in China and overseas markets, with a total committed capital of HK$106.6 billion ($13.7 billion; €11.75 billion), as at end of June. It has two infrastructure funds, one being the overseas infrastructure fund officially launched this July and another being the Shandong Hi-Speed Everbright Industry Fund, a 1.8 billion yuan ($271 million; €233 million) China-focused vehicle.