GIP raises $13.5bn for Fund IV, eyes September final close – exclusive

Nearly 150 LPs have committed to GIP IV, which will follow the same strategy as its predecessors and target 15%-20% gross returns.

Global Infrastructure Partners has raised $13.5 billion for its fourth flagship infrastructure fund and is expected to reach the vehicle’s $20 billion hard-cap by September, according to sources familiar with the fundraising.

The New York-based firm has drawn 140 investors since launching the fund last year, according to one of the LPs that committed to the vehicle. The LP told Infrastructure Investor that GIP has held four interim closes, with the first on $6.5 billion in late 2018. It is expected to hold two more on 31 May and 28 June before finishing fundraising later in the year.

Another LP source told Infrastructure Investor that the firm has “wrapped up heavy marketing” for GIP IV – set to be one of the two biggest funds of the year – and is waiting on final commitments to be approved. A document published by Plymouth County Retirement Association in January says the firm is expecting to hold final close in the second or third quarter of this year.

The Plymouth document and a GIP marketing document seen by Infrastructure Investor show the firm charging management fees on a sliding scale, ranging from 1.75 percent for commitments up to $75 million to 1 percent for amounts greater than $225 million. Fund IV has a minimum fee of 1.3 percent.

According to the marketing and pension documents, other fund terms are similar to previous GIP vehicles. These include 20 percent carried interest, an 8 percent preferred return, a five-year investment period and a 10-year total duration with two possible one-year extensions at the firm’s discretion. GIP is targeting gross returns of between 15 and 20 percent.

GIP is maintaining the same investment strategy for its latest fund, seeking energy, transportation, and water and waste management assets primarily in OECD countries, while up to 15 percent can be invested in “select” non-OECD countries. According to the pension document, GIP IV will make between 10 and 15 investments, with equity ticket sizes ranging from $1 billion to $2.5 billion per deal.

GIP IV is on pace to be the firm’s largest yet and could surpass its predecessor as the industry’s largest closed-ended infrastructure fund. Its predecessor, GIP III, closed in January 2017 after raising $15.8 billion and has made eight investments, including in US oil and gas company EnLink Midstream, Italian high-speed rail business NTV Italo and a joint venture in German offshore wind farm Borkum Riffgrund 2. According to the marketing document, GIP III is roughly 75 percent deployed or committed.

One LP source described GIP as “a buyout manager that focuses on infrastructure”, saying the firm typically acquires assets, improves their value over time and divests.

According to Infrastructure Investor data, some of GIP IV’s largest commitments include $500 million from Alaska Permanent Fund Corporation, $400 million from the Oregon State Treasury and $225 million from the Florida State Board of Administration.

GIP rival Brookfield Asset Management is also raising its fourth flagship infrastructure fund. The target of $17 billion means it is set to be the Canadian firm’s largest to date. A first close on $14 billion is expected later this month.

GIP did not respond to a request for comment.

Eduard Fernández contributed to this story.