GIP is two LPs away from $22bn Fund IV close

Commitments from two SWFs totalling around $1bn should help drive the record-breaking close above the fund's original $20bn hard-cap.

Global Infrastructure Partners is awaiting a final $1 billion in commitments from two non-US sovereign wealth funds before closing its fourth flagship vehicle on $22 billion, according to a person familiar with the matter.

GIP IV is expected to be the industry’s largest ever infrastructure fund. It is eyeing a final close next month on $2 billion above its hard-cap, which the firm increased after receiving permission from already-committed LPs this summer, the source told Infrastructure Investor.

A GIP marketing document seen by Infrastructure Investor shows 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.

According to the document, 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.

The firm is maintaining the same investment strategy for its latest fund, seeking majority or control positions in 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. It has set an indicative hold period of five to seven years, the marketing document shows.

According to documents made public in January by the Plymouth County Retirement Association, which was considering committing $10 million to GIP IV, the fund will make between 10 and 15 investments, with equity ticket sizes ranging from $1 billion to $2.5 billion per deal.

It is unclear whether the Plymouth County Retirement Association approved the $10 million commitment to GIP IV or whether it was accepted by GIP given that the firm has set the minimum commitment for its latest fund at $25 million.

LPs that are known to have committed to GIP IV, according to Infrastructure Investor data, include the Alaska Permanent Fund Corporation ($500 million) the Oregon State Treasury ($400 million) the Florida State Board of Administration ($225 million) and the Connecticut Retirement Plans and Trust Funds ($200 million).

GIP began raising its latest fund in 2018. By May, it had collected $13.5 billion from 140 institutional investors, an LP that had committed to the fund told Infrastructure Investor at the time.

GIP has already broken the industry’s record for the largest closed-ended fund, closing GIP III in January 2017 on $15.8 billion.

So far, unlisted infrastructure fundraising this year has lagged the pace set in 2018, according to Infrastructure Investor data. Fund managers have raised $49.5 billion through the third quarter, compared to $85.2 billion during the same period last year. However, expected final closes before 2020 by GIP and Brookfield Asset Management, which is also raising its fourth flagship vehicle seeking around $20 billion, will likely make 2019 a stand-out fundraising year.

GIP declined to comment.

Eduard Fernández contributed to this story.