Cube nears broadband fund close, preps €1.5bn Fund III – exclusive

Cube Infrastructure Managers is set to close the Connecting Europe Broadband Fund on its €600 million hard-cap in June, as it plans the launch of its third flagship infrastructure fund, Infrastructure Investor has learned.

Luxembourg-based Cube was selected to manage the CEBF by the European Investment Bank in December 2016, although it did not start formally raising capital until 2018, with a target of €500 million. It is believed that Cube now anticipates a close on €600 million, having raised funds from a mix of public European financial sources, as well as private institutional investors.

The greenfield fund’s mandate was to invest in underserved areas in Europe and it has since invested in fibre businesses in Croatia, Slovenia and the UK. The fund’s mandate allows it to invest equity, mezzanine and subordinated debt.

Infrastructure Investor understands that the close of the CEBF will be followed by the launch of Cube Infrastructure Fund III, which is believed to have a target of €1.5 billion. The vehicle is yet to be formally launched, with a source indicating that existing LPs remain in discussions with the manager over when to hold a first close. One LP, the Maine Public Employees Retirement System, has already approved an €85 million commitment to the vehicle.

Cube declined to comment on both fundraisings.

Fund III’s predecessor closed on €1.04 billion in July 2019, slightly below its €1.2 billion target, with investors in Europe, North America and Asia. The third vehicle is set to maintain the €1.5 billion hard-cap of Fund II, as Cube looks to continue its mid-market strategy of investing in energy transition, telecoms and public transport. It is targeting a gross internal rate of return of between 12 and 15 percent.

Cube Infrastructure Fund II has made 10 investments to date, including in bus networks in Denmark, Sweden and France, an EV charging infrastructure company in the UK and a telecoms network in Switzerland.