First State concludes EDIF II second series on €1.4bn

The vehicle raised more than €500m beyond the hard-cap in its latest round, with a third series in the offing.

First State Investments has closed the second series of its European Diversified Infrastructure Fund II on €1.4 billion, bringing the fund’s total size to €2.1 billion.

The European unit of Australia’s Colonial First State has doubled the initial €700 million targeted for the second round of EDIF II at the outset of the series’ fundraising in the autumn. First State also confirmed it had sought permission from investors to go beyond its €900 million hard-cap, as Infrastructure Investor revealed in December.

There remains €400 million to raise to reach EDIF II’s total hard-cap of €2.5 billion, with the initial €700 million secured by March 2017. A third series will be launched to complete the fund, although there is currently no set time frame for this.

“We will open Series 3 when Series 2 is substantially committed, so this will depend on the success in our deal flow over the coming months,” a spokeswoman for the firm told Infrastructure Investor. “The hard-cap for the Fund is €2.5 billion, so we will not be raising any more than this across the three series.”

The fund had its first draw-down of €240 million in May 2017 to fund the acquisitions of French district heating group Coriance from KKR and Portuguese wind platform Finerge, which has since been grown to a portfolio of 891 MW. Further deals were announced in March with First State taking a 50.1 percent stake in Danish ferry operator Scandlines and agreeing the buyout of E.ON’s gas grid business in Sweden. EDIF II has also provided equity to Parkia, the Spanish car parking business first invested in by EDIF I in 2016.

Once the most recent of those transactions are closed later this month, the €700 million of commitments garnered from the first series will be fully deployed.

EDIF II is looking to generate a gross IRR of between 8 percent and 15 percent, pension fund documents have previously revealed. It has an initial term of 15 years with an option to extend in five-year increments and a fee structure of 1.15 percent on commitments below €50 million and 1.05 percent on those below €100 million.

LPs in the fund include Finnish pension group Elo and UK-based local authority schemes in Swansea and Worcestershire, the latter of which provided a further £25 million ($33.3 million; €28.4 million) in December on top of its initial £75 million investment.