Exclusive: Prostar opens office, splits fundraising

The Sydney-based energy infrastructure investment firm has opened its third office globally in Hong Kong, after deciding to split its maiden global fund into two regional funds.

Prostar Capital, the fund manager with offices in Sydney and Connecticut, is to open a Hong Kong office as it adapts its fundraising to respond to investor demand.

A spokeswoman told Infrastructure Investor that the Hong Kong office currently has about three professionals on the ground, with partner John Troy having been appointed as head of the new Hong Kong office. With more than 20 years’ infrastructure investment experience in the Asia-Pacific region, Troy will lead the firm’s investing and management efforts with a focus on northern Asia including China, Japan and South Korea.

The Hong Kong office will complement Prostar’s existing Asia-Pacific focused investment team based in Sydney. The firm is understood to have five professionals stationed in its Sydney office, and two in Singapore, as well as some independent professionals in Seoul. The spokeswoman said that “given the attractive investment opportunities we are seeing for our Asia-Pacific energy infrastructure activities, we needed to get some more people on the ground”.

Prostar also confirmed that it recently completed its first investment, acquiring a strategic minority stake in an oil storage terminal being constructed in the Port of Fujairah in the United Arab Emirates, which has grown to become the world’s second-largest bunkering port behind Singapore.

Prostar originally launched its maiden infrastructure fund in early 2012, targeting $1 billion for opportunities worldwide, Infrastructure Investor reported earlier. In November 2012, the firm held a $300 million first close for that fund, with capital committed primarily by a Korean institutional investor. The firm then began looking at investment opportunities.

Prostar declined to comment on fundraising when approached, but it is understood that the firm decided a global energy infrastructure fund was “too broad” for investors at this stage, and decided to split the fund into two distinct niches: one fund targeting the US, and the second targeting Asia. Both funds have a target size of $750 million. $200 million of the first close capital went to the US fund, while $100 million went to the Asia fund.

The Fujairah investment will act as a seed asset for the Asia fund. It is understood that Prostar hopes to hold a first close on the fund in the first half of 2014, and is expecting to secure a seed asset for the US fund in Q1 2014.

For both its funds, Prostar will be targeting midstream energy infrastructure assets, such as storage terminals and pipelines. The firm’s focus is on brownfield investments, seeking mostly to re-market storage space and improve the efficiency of operations. With a target IRR in the mid- to high-teens, Prostar is targeting institutional investors worldwide for both funds.