Fundraising

Exclusive: EQT launches open-ended, yield-focused fund

The Swedish firm hopes to grow the vehicle to an eventual target size of several billion euros by enticing investors through an innovative co-investment structure.

-

Stockholm-headquartered fund manager EQT has launched an open-ended vehicle to help it make a mark in core infrastructure markets, according to people with knowledge of the matter.

The buyout firm has since 2009 been investing in the asset class through its ‘Infrastructure Funds’, which have a fixed term and are largely focused on “value-add” opportunities. It is now aiming to raise a vehicle that will target longer-dated, lower-risk assets, through a strategy geared towards reaping recurrent yield rather than capital gain, several sources told Infrastructure Investor.

EQT hopes to collect several billion euros for this new venture, though it could start with a smaller initial pool of between €500 million to €1 billion, the sources said. The firm’s previous infrastructure vehicle, EQT Infrastructure Fund II, reached its final close in January 2013 on €1.925 billion.

Though the asset class already counts a number of open-ended funds, EQT’s new vehicle aims to differentiate itself through an innovative structure: its ambition is to serve as an underwriting platform, which would first originate and buy the asset before syndicating the equity among limited partners.

The firm is in the process of hiring new staff to help invest and manage the fund, which will be headed by Lennart Blecher, EQT’s deputy managing partner and head of infrastructure. 

Assets that have recently joined the firm’s infrastructure portfolio include WASH Multifamily Laundry Systems, a California-based provider of laundry services it backed last month, and IslaLink Submarine Cables, an operator of submarine fibre optical cables in and around Spain, which it bought in September. 

Earlier this week, the fund manager also bought the remaining 49 percent stake in EEW Energy from Waste it did not already own from German utility E.ON, having first invested in the business in March 2013. This came after the firm sold RTI, a Minneapolis-based cooking oil management services business, to Los Angeles-based Aurora Capital Group in April.

By contrast, EQT’s new platform will target more conventional infrastructure assets such as toll roads and bridges, the sources said. The firm declined to comment on the vehicle.