Fengate launches fund for South Korean investors

The Canadian firm has teamed up with KB Asset Management to raise a $180m vehicle that will invest in North American infrastructure on behalf of South Korean institutional investors.

Toronto-based alternative asset manager Fengate Capital Management (Fengate) has closed a $180 million fund in collaboration with KB Asset Management, the investment arm of South Korea's KB Financial Group.

The KB Fengate North America Infrastructure Fund I was raised in just under a year, securing capital commitments from South Korean institutional investors wishing to invest in North American infrastructure assets.

“We’ll be targeting mostly availability-based PPPs [public-private partnerships] and we’ll have some allocation towards independent power projects,” Fengate president and chief executive Lou Serafini told Infrastructure Investor on Tuesday.

“The fund will likely have five to seven investments and the gamut will depend on the transaction and who the partners are. But this particular fund will be co-investing alongside other Fengate funds.”

Fengate will be responsible for originating, sourcing and executing transactions in North America, while KB Asset Management will be responsible for investor relations and compliance in South Korea.

The fund’s investors, which Serafini described as sophisticated and already investing abroad, are the Public Officials Benefits Association, Dongbu Insurance, Heungkuk Life Insurance, Hyundai Marine and Fire Insurance, and Lotte Insurance.

A portion of the fund has already been invested with the acquisition of an equity stake in the Fort St James Green Energy Project in British Columbia. Serafini could not comment on the size of the investment at this time but the transaction is expected to close later this month.

The Fort St James Green Energy Project is a C$235 million (€169.9 million; $189.5 million), 40 megawatt (MW) biomass-fired electricity generation facility that will sell power under a 30-year power purchase agreement to electric utility BC Hydro and Power Authority.

Fengate and Dalkia Canada, a subsidiary of Veolia Environnement and EDF, are developing the project, which is under construction and expected to be completed by summer 2016, according to a joint statement. The two firms are also developing an identical facility in Merritt, British Columbia.

In addition to infrastructure, Fengate also invests in real estate, the sector in which it initially focused on when it was formed in 2000 with the launch of Northgate Properties, a real estate fund established on behalf of a group of high-net-worth investors.

The firm began investing in infrastructure in 2006 when it established its first infrastructure fund targeting investments in Canadian PPPs and independent power projects. Today it manages several investment funds with aggregate capital under management of C$2 billion.