Infracapital closes greenfield fund on £1.25bn hard-cap

Overseas investors are behind 50% of the commitments for the vehicle targeting returns in the mid to high teens.

Infracapital has closed its maiden greenfield fund on £1.25 billion ($1.6 billion; €1.3 billion), reaching the vehicle’s hard-cap and exceeding its £1 billion target.

The infrastructure investor said 85 percent of the capital for the 25-year Infracapital Greenfield Partners I came from pension funds and insurance companies.

Strong backing was received from UK local authority pension schemes, including Leicestershire County Council, Suffolk County Council, South Yorkshire Pensions Authority and East Riding of Yorkshire Council. The fund, which was nearly two years on the road, offered discounted fees to UK local authority investors, according to Leicestershire.

Infracapital added that half of the fund’s commitments came from overseas investors, including Spanish insurer Lagun Aro, Swedish pension scheme Första AP-fonden, Canada’s IWA-Forest Industry Pension and the Dutch Stichting IMAS Foundation, according to filings with Companies House. It also received seed capital from parent company Prudential and the European Investment Bank.

The fund is targeting returns in the mid to high teens, the Leicestershire pension said following the confirmation of its £30 million investment last month. The vehicle is aiming to make 8-15 investments, based on an equity investment of £25 million-£200 million, documents from the Lincolnshire scheme stated.

It is already 43 percent deployed after making five confirmed investments: in the broadband sector in the UK and Poland; in solar developments in France and Ireland; in Italian social infrastructure assets; and in the UK biomass and energy-from-waste platform Bioenergy Infrastructure Group.

Last week, it joined the Infracapital-managed Digital Infrastructure Investment Partners fund to agree the acquisition of UK broadband provider WightFibre, while it is also expected to double its initial commitment in BIG.

Infracapital established its greenfield unit, headed by Andy Matthews, in April 2015. “We have already made a strong start, investing in a diversified portfolio of highly attractive assets, and we see significant pipeline opportunities in the greenfield market, both in the UK and continental Europe,” Matthews said.