Fundraising

Exclusive: First State set for September second close

Having sealed a June first investment from its new European vehicle, the firm expects to hit its €700m target the fund’s debut series in the autumn.

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First State Investments, the asset management arm of Australia’s Commonwealth Bank, has enlisted commitments of more than €400 million as it advances towards an interim close for the first tranche of its European Diversified Infrastructure Fund II, according to a top executive at the firm.

Like its predecessor, EDIF II, which is targeting €2 billion with a €2.5 billion ceiling, is being raised in successive stages, which First State calls “series”. Having amassed €221 million by the end of last month after holding a €130 million first close in June, the firm is set to hit another close in September, Philippe Taillardat, co-head of infrastructure investment management at First State, told Infrastructure Investor.

First State plans to raise three series for EDIF II, the second of which will likely be launched in Q4 2017. The above figures do not include Commonwealth Bank of Australia's own commitment, which Taillardat says is worth 3 percent of any Series, with an aggregate cap at €50 million.

Series One has a target of €700 million, which First State expects to reach in October or November. Taillardat anticipates that the last closing will probably happen in November-December, with total commitments at between €700 million and €900 million.

The fund has a target gross return range of 8 to 15 percent IRR. Its first asset is Coriance, a French district company First State acquired from KKR in June for an undisclosed sum. The firm’s two other funds – EDIF I and the Global Diversified Infrastructure Fund – were also used to fund the acquisition.

Taillardat said First State would make about six bids for various assets, notably in the gas distribution, renewables and district heating sectors, before the end of the year. He noted that the firm is monitoring a pipeline of about 150 opportunities for the coming three years.

Coriance was only one of two deals First State sealed in June, coming just a week before the firm agreed to buy Parkia, a Spanish car park operator, from Sweden’s EQT and Iberian insurer Mutua Madrileña. The transaction, which sources placed at “more than €300 million”, was entirely funded via EDIF I.