Infracapital reaches £1.3bn final close

The London-based fund manager’s Infracapital Partners II vehicle has raised over £1bn, plus £300m in co-investment pledges.

Infracapital, the infrastructure investment arm of UK asset manager M&G, has posted a final close of its Infracapital Partners II fund on more than £1 billion (€1.3 billion; $1.6 billion), with co-investment pledges taking the total to £1.3 billion.

The 12-year fund, which had a target of £1 billion, is the successor to Infracapital Partners I, which was launched in 2005 and raised £908 million. The firm also managed a 2002-vintage social infrastructure public-private partnership (PPP) fund, which raised £225 million.

Fund II, which targets core infrastructure assets across Europe, is already 37 percent invested – with 21 percent of the fund’s capital accounted for by its investment in the UK’s Affinity Water, which serves 3.5 million customers in south-east England. The fund’s other investments are Swedish utility FEAB and Calvin Capital, a UK supplier of meters to energy companies.

The fund received 58 percent of its capital in the form of re-ups from existing investors, with insurance companies accounting for 39 percent of the total raised, public pensions 21 percent and funds of funds 20 percent.

While the UK and the rest of Europe was the biggest source of capital, significant amounts were also contributed by organisations based in Asia and North America. In response to a question from Infrastructure Investor at a press briefing this morning, Martin Lennon, the founder and head of Infracapital, said he had been most surprised by the level of demand from Germany and Canada.

Ed Clarke, a founder and director of the firm, said “Europe remains the key infrastructure market today” with classic, stable, core opportunities available in Northern Europe and recovery and restructuring opportunities in Southern Europe.

The two founders noted the “very strong” financing environment and said Infracapital had been taking advantage of this by putting appropriate long-term financing into its portfolio companies – making use of both the domestic debt market as well as the US private placement market.