Exclusive: iCon hits hard cap in three months

The London-based fund manager has raised €800m for its third fund, which has posted a first and final close with a 100% investor re-up rate.

iCon Infrastructure, the London-based mid-market fund manager, has closed its third fund – iCON Infrastructure Partners III – on its hard cap of €800 million.

The fund, which had a target of €600 million, was raised in just three months and achieved a so-called “one and done” (a simultaneous first and final closing). It boasted a 100 percent re-up rate, with all the investors from the firm’s €500 million fund two – which closed in 2013 – also backing fund three. Market sources put the level of demand for the fund at around €1.6 billion.

The number of investors increased from 24 in fund two to 37 in fund three, with iCon selectively diversifying by adding new investor types and geographies.

In an exclusive interview with Infrastructure Investor, iCon senior partner Paul Malan said around 55 percent of investors were from the UK and Europe, 35 percent from North America, and the remaining 10 percent from Asia and the Middle East.

He noted that “quite a few” investors were from Germany, where iCon had launched a new office (in Duesseldorf) in September last year partly to service its investors in the country.

Malan added that public and private pensions were the biggest investor type, followed by life insurance companies and sovereign wealth (or “state-affiliated”) funds.

Although iCon did not need to search for new investors, Malan said it was “surprising how many investors are out there with lots of money to commit. It’s a very different fundraising environment from two years ago.”

He added that there is a “good pipeline of future deals as it’s a very active market. In certain parts of the market high prices are being paid, but there is an awful lot going on.”

Placement agent and advisory firm Campbell Lutyens advised on the fundraising along with law firm Kirkland & Ellis International.

James Wardlaw, a partner at Campbell Lutyens, attributed the popularity of the fund to iCon’s track record and persistence with the same strategy – which meant keeping the fundraising target on a tight leash. “They didn’t want to take a lot more money even though they could have done,” he told Infrastructure Investor. “They are going to carry on doing the same kind of deals they have been doing and there will be no ‘scope creep’.”

He also pointed to the firm’s ability to either avoid auctions altogether or have a good angle within an auction. “European infrastructure looks pretty over-priced. Nothing’s cheap. But these guys can truffle out opportunities.”

Given the modest size of the fund, coupled with the high level of demand, Wardlaw said his firm’s role was less about placement than advising how to manage the fundraising process – including managing expectations and being transparent.

He cautioned against extrapolating too much from iCon’s experience when evaluating the overall state of infrastructure fundraising. “It’s not just a question of reversing the truck and loading on as much money as you can – investors are a lot more selective than that. But there are certainly a lot of people looking to deploy more capital in the asset class.”

Earlier this month, iCon fully committed its capital from fund two with the acquisitions of Rothes CoRDe, the operating company for a combined heat and power (CHP) plant in Scotland, and Service Terminal Rotterdam, owner and operator of a bunker fuel terminal in the Port of Rotterdam in the Netherlands.