German fund manager Commerz Real has launched a new infrastructure fund targeting €500 million which it says is “consciously addressing foreign investors”.
The Commerzbank subsidiary said CR Institutional Infrastructure Multi-Asset Fund II will target between six and eight investments, eyeing an IRR of between 6 and 8 percent. It has a term of 15 years and is structured as a SICAV-RAIF vehicle.
Although the firm described the fund as Europe-focused, it has allocated up to 40 percent to be invested beyond European Economic Area member states. It still hopes to invest at least 90 percent of the fund in euros or employ currency-hedging mechanisms.
The fund has been launched to provide the opportunity to many of Commerz Real’s existing investors access to infrastructure deals they couldn’t previously gain, Christoph Muller, head of institutional sales, told Infrastructure Investor. The investor base is primarily German, although the firm is looking to widen that, he added. Muller also said the fund has an investment phase of three years and thus hopes to close the fund within 12-18 months.
Commerz Real said the vehicle will primarily be energy-focused, with 60 percent of investments targeted in energy generation, energy networks and other energy infrastructure sectors. A further 20 percent is reserved for transport and mobility sector and 20 percent in sectors such as telecoms and social infrastructure. Core and core-plus deals will be targeted but these may be supplemented with opportunist value-add, higher risk ventures.
Commerz Real’s move to look at assets beyond the energy sector represents a slight shift in strategy for the firm. Its largest infrastructure deal remains the €1.3 billion acquisition in 2011 of a 74.9 percent stake in Amprion, the largest of four German transmission operators.
The manager also launched five German solar funds between 2010 and 2013, which own 49 assets between them. Commerz Real revealed at the end of June that these funds are generating an average IRR of 8.75 percent, slightly above their expected return of 8 percent.
Commerz Real also launched in late 2016 the CR Institutional Renewable Energies Fund, targeting €300 million. The vehicle has since spent close to €200 million on German wind farms and is set to close in the next three to five months, according to Muller.