A planned £200 million ($284.2 million; €229.6 million) IPO of a global infrastructure fund by UK-based Gravis Capital Management has been cancelled following “challenging” market conditions.
Gravis said the Global Diversified Infrastructure vehicle only received close to the £75 million minimum gross proceeds, leading to the cancellation of the offering on the London Stock Exchange.
The fund was launched in early March and had hoped to have begun listing at the beginning of this month. However, three weeks after the publication of its prospectus, the group extended the fundraising period to “allow investors the opportunity to participate in the issue to the fullest extent practicable”, before eventually halting the process this week.
“Whilst the issue has received a positive response from potential investors, current market conditions represent a challenging background in which to raise equity capital,” it stated.
The fund hoped to place its strongest focus on the US and the wider European market, with planned investment sectors comprising energy, accommodation, transport and utilities. It had planned to avoid – or invest minimally – in the UK market, in part due to the planned nationalisation policies of the opposition Labour party.
However, Gravis founder Stephen Ellis told Infrastructure Investor that while the group deliberately diversified because of this, the atmosphere in the listed space generated by Labour’s plans proved unhelpful. He added that while he has no doubt existing offerings will continue to gain support, those funds at the conceptual stage are finding it more difficult to demonstrate the benefits to investors.
Gravis had hoped to raise at least £200 million for the fund, although it had indicated this could have increased to as much as £350 million, depending on investor interest. It had been targeting investments in private infrastructure funds, with a strong focus on secondaries, aiming for returns of between 8 and 10 percent. It was also open to making co-investments either directly or through funds. Global Diversified Infrastructure was set to be Gravis’s sixth infrastructure vehicle. Its other funds are largely focused on debt investments in the UK.
The fund’s cancellation follows on from other recent postponements of infrastructure fundraisings on the London Stock Exchange. The Tri-Pillar Infrastructure Fund, led by former John Laing Infrastructure Fund co-founder Andrew Charlesworth and eyeing the European and US markets, suspended its £200 million offering in December, citing a lack of progress on its maiden deal. It was joined that month by sustainable infrastructure investment group Greensphere Capital, which postponed its up to £500 million listing “in order to accommodate its key cornerstone investors”.