GIP closes largest-ever infra fund at $15.8bn

The US fund manager’s third global infrastructure vehicle attracted 191 LPs, about half of which were new investors.

Global Infrastructure Partners has closed its third unlisted global infrastructure fund on $15.8 billion, beating Brookfield Infrastructure Fund III’s $14 billion 2016 close to become the asset class’s biggest unlisted infrastructure fund, Infrastructure Investor has learned.

The vehicle attracted 191 investors from across the globe, roughly half of which were new investors. In public documents, the Arkansas Teacher Retirement System – which committed $50 million to GIP III – said the fund is targeting a net IRR of between 12 and 15 percent, charging a 1.75 percent management fee on committed capital and investment commitments thereafter. GIP III has a 20 percent carried interest and an 8 percent hurdle rate. It will have a five-year investment period and a 10-year duration, with four possible one-year extensions.

Like the firm's previous fund, GIP III will invest in the energy, transportation and water sectors in developed markets, pursuing a strategy of large-scale joint ventures with industrial partners. The vehicle will seek to make between 10 and 14 equity investments and will generally aim for a controlling stake in the assets it invests in, according to documents from the Oregon Public Employees Retirement Fund.

GIP III launched in October 2015 and had raised $10.8 billion as of last May, according to a filing with the Securities and Exchange Commission. Returning investors include OPERF, which approved a $400 million commitment to Fund III, double what it committed to GIP's second fund. Washington State Investment Board committed $1 billion, up from $250 million for Fund II. And the Florida State Board of Administration also renewed its commitment to GIP, approving $150 million to GIP III last March.

Fund III has been busy deploying capital, with its most recent transaction being the acquisition of about 20 percent of Spain's Gas Natural in a close to €4 billion transaction. Spanish lender Criteria Caixa agreed to sell its stake, making GIP the second-largest shareholder in the business. The price offered by the manager, at €19 a share, valued the stake at €3.8 billion.

In addition to its record-breaking third global fundraise, GIP also closed on its debut debt fund last year – Global Infrastructure Partners Capital Solutions Fund – on around $1 billion and raised A$2.75 billion ($2.1 billion; €1.9 billion) for its first regional strategy, dedicated to the Australian market. On the global front, GIP has raised $13.89 billion for Fund III's predecessors. According to ATRS, GIP has invested more than $11 billion since 2008, achieving a net IRR of 15.7 percent.

Late last year, US President Donald Trump tapped GIP chairman Adebayo ‘Bayo’ Ogunlesi to join a group of executives advising on how government policy and the private sector can work together to boost the economy.

Ogunlesi joined the 16-member ‘President’s Strategic and Policy Forum,’ chaired by Blackstone co-founder Steve Schwarzman, that will share private-sector experience and knowledge with Trump as he implements policies to create jobs and spur economic growth.