Infracapital closes third fund on £1.85bn hard-cap

The vehicle booked over £1bn in re-ups, with 40% of new commitments coming from Asian investors.

London-based fund manager Infracapital has secured a £1.85 billion ($2.5 billion; €2.1 billion) close on its third fund, exceeding its £1.5 billion target.

The close on the hard-cap came after seven months of fundraising, according to Infracapital. The firm said there was “significant excess demand” but believes the final volume of the fund makes it “optimally sized” for the group’s mid-market investment strategy.

As with its predecessors, Infracapital Partners III will target investments in the transport, utilities, renewable energy and telecoms sectors across Europe. Infracapital co-founder Martin Lennon told Infrastructure Investor in November that investment “selection choice is as good as it’s ever been”, with the European landscape more diverse geographically and sectorally.

The third fund is yet to announce an investment, with this believed due to the speed of the fundraising. Infracapital Partners II was 37 percent invested when it closed on £1 billion in October 2014.

About two-thirds of investors have re-upped with Infracapital III, contributing more than £1 billion. Infracapital said more than 30 percent was raised from investors outside Europe and 40 percent of new commitments came from LPs based in Asia, while more than 80 percent of the funds were raised in euros. The vehicle received a £200 million commitment from parent company Prudential Portfolio Management Group, Prudential confirmed last month.

The first instalment of Infracapital’s funds, a £908 million vehicle closed in 2008, was fully realised last year, returning 2.1 times capital to investors and an 11.4 percent IRR. Infracapital Partners II was delivering a 24.9 percent gross IRR as well as a 9.2 percent average yield since inception, as at the end of September 2017.

The latest offering follows the £1.25 billion closing of Infracapital’s greenfield fund in November, above its £1 billion target. Infracapital continues to invest the fund, with its latest deal being a bid to take over Gigaclear, in a move that would value the company at £270 million. Infracapital first invested in the UK-based rural broadband provider three years ago and currently holds a 43.2 percent stake.