Franco-Belgian partners banking group Dexia and investment firm GIMV have teamed up again to launch their second infrastructure venture – DG Infra Yield, a 30-year fund.
DG Infra Yield will aim to raise at least €115 million and is targeting a first close by September. So far, the fund has already raised €80 million from financial firm Arcofin, insurer Ethias, bank VDK Spaarbank, Flemish state-backed fund Vlaams Toekomstfonds and Dutch construction pension Pensio-B.
The new fund, however, is a different proposition from the 10-year, €135 million DG Infra+, launched by the partners in 2007. Although both mainly target infrastructure investments in the Benelux countries – with selective real estate deals also part of their remit – DG Infra Yield, as its name suggests, is focusing on annual cash distributions to investors, linked to a long-term yield, the companies said in a statement.
A spokesman from GIMV pointed out that, in response to market demand, part of the fee structure will be linked to the fund’s annual yield, although he declined to go into specifics. In a recent interview with Infrastructure Investor, Henk Huizing, head of infrastructure investments for €89 billion Dutch pension asset manager PGGM, was receptive to this idea.
“We have been discussing the possibility of paying a fee based on annual yield with a hurdle of between five percent and seven percent,” he said. “This would allow GPs to get paid on an annual basis instead of having to wait for a longer period of time,” Huizing added.
The fund will be managed by a seven-man team of Belgian and Dutch origin which can be expanded according to how the fund’s portfolio develops, the companies said in a statement.
To better accomplish these annual cash distributions to investors, DG Infra Yield plans to mainly invest in junior debt and mezzanine debt for mature assets although senior debt and equity investments are also on the agenda.
Its first investment was the provision of a €10 million mezzanine debt tranche for an offshore wind project called Belwin, located about 50 kilometres off Zeebrugge, in Belgium. Once the €614 million project is fully completed by the end of the year it should have a capacity of 330 megawatts. The first part of the project, comprising 55 wind turbines, was finished in September 2009.