First State approaches €600m for European infra fund

The new commitments allegedly include a re-up from an existing investor to the fund, which recently restructured to a ‘hybrid’ vehicle with a 15-year life that can be extended in five-year blocks.

First State Investments has raised close to €600 million for its European Diversified Infrastructure Fund, a €100 million increase from the €500 million it had raised in early May, sources close to the fundraising told Infrastructure Investor.

Market rumour is that the new commitments also include at least one re-up from an existing investor. First State’s European vehicle has been in the market since 2007. It held a first close on €183 million in August 2009 and a second, €366 million close in June 2010.

Since then, however, the fund has changed its structure from an open-ended investment vehicle – meaning that the fund had no defined term and had the capacity to add on additional investors throughout its life – to a “hybrid” structure. The latter was created by First State earlier this year and will see the vehicle start with a 15-year life and give investors the opportunity to extend its life in five-year blocks.

According to one of the sources, the fundraising has experienced “great success due to the changes to the fund structure”.

Changes in fund structures are not uncommon and have proved fruitful to other fund managers in the European market. Cube Infrastructure, the €1.1 billion Natixis-backed vehicle, originally started life as an open-ended fund, but found greater traction in the market once it restructured to a closed-ended fund with a 12-year life.

This is not to say that open-ended funds are not successful. Australian asset manager Industry Funds Management has championed open-ended funds for its infrastructure platform, which has $5.35 billion of committed capital, according to the Infrastructure Investor 30, Infrastructure Investor’s annual ranking of the industry’s largest investors. 

First State also manages an open-ended unlisted fund in Australia, the A$546 million (€411 million; $581 million) Global Diversified Infrastructure Fund, which owns a portfolio of Australian airports and UK utilities. 

The firm’s European vehicle was launched in 2007, when it hired former RREEF director Danny Latham to lead the effort. The fund focuses on economic infrastructure within Europe, such as utilities and transportation.