Exclusive: GIP III to set new record with $12bn target

Global Infrastructure Partners’ third fund is aiming to go from a first close by the end of this year straight to a possible $15bn final close within months.

Global Infrastructure Partners (GIP), the New York-headquartered fund manager, is aiming to raise at least $12 billion for its third fund (GIP III) by the middle of next year, according to market sources.

The fund, which would represent the largest conventional fundraising in the infrastructure asset class, is expected to post a first close by the end of this year and then go straight to a final close. That final close is expected by the middle of next year at the latest.

Some sources also suggest the fund's hard cap could be as high as $15 billion. GIP itself is unable to comment on fundraising for regulatory reasons.

GIP previously set the record for the largest infrastructure fund in October 2012, when it closed its second vehicle, GIP II, on $8.25 billion. Although Canada's Ontario Municipal Employees Retirement System (OMERS) bettered this with its $12.6 billion Global Strategic Investment Alliance in July last year, this is viewed as a co-investment platform rather than conventional fund.

Investors in GIP II included the likes of Washington State Investment Board and the California Public Employees Retirement System in the US and the UK's Shropshire County Pension Fund. GIP's debut fund, GIP I, closed on $5.64 billion in May 2008.

The third fund will be likely to continue the investment theme of forming strategic corporate investment partnerships, which has become a well-established feature of the firm's second fund. The firm sees this strategy as an important differentiator versus other funds in the market.

Such deals – which include this year's partnerships withHess Corporation to invest in US midstream infrastructure assets and with ACS to develop a renewable energy platform – can be highly capital-intensive and would allow GIP potentially to put billions to work in single deals. The firm would also likely use some of its fresh capital to provide follow-on investments for existing portfolio companies.

Media reports today named GIP as a backer of Australian logistics services firm Qube's building of a 20 percent stake in Asciano, the freight business. The move is seen as an attempt to block the planned A$8.9 billion (€5.8 billion; $6.3 billion) buyout of Asciano by Canada's Brookfield Asset Management. Canada Pension Plan Investment Board has also been named as a Qube backer.

In the November 2015 issue of Infrastructure Investor, GIP fell from third to sixth place in our Infrastructure Investor 30 ranking of the largest capital raisers in the asset class over an approximate five-year period. However, adding at least another $12 billion to its coffers would push the firm up into second place behind Macquarie Infrastructure and Real Assets.

GIP has 13 partners and is headed by chairman and managing partner Adebayo Ogunlesi, the former global head of investment banking at Credit Suisse. From its offices in New York, London and Sydney, the firm targets investments in the energy, transport, water and waste sectors.