InstarAGF mulls C$1bn sophomore vehicle – exclusive

Toronto-based InstarAGF Asset Management is considering launching its sophomore infrastructure vehicle in early 2019 with a C$1 billion ($800 million; €640 million) target, after reaching the halfway point for its first fund following a district energy investment.

Gregory Smith, chief executive of InstarAGF, told Infrastructure Investor the firm will “stay true to the mid-market” for its second infrastructure fund. Their first fund, InstarAGF Essential Infrastructure Fund, closed last June on C$740 million and has just acquired a 50 percent interest in Creative Energy, a Canadian company developing district energy networks.

Smith did not disclose how much InstarAGF invested in Creative, but said the firm will help finance the development of a C$150 million pipeline of district energy projects in Vancouver and Toronto. Creative has built more than 14 kilometres of distribution pipes that power more than 210 buildings using technologies including cooling and heat recovery and combined heat and power.

“District energy and micro grids are really community or neighborhood energy,” Smith said. “It’s becoming the newest solution for energy delivery, rather than having big, massive power plants and transmission lines.”

The portfolio InstarAGF has built from its Essential Infrastructure Fund includes a majority interest in Canadian aviation services company Skyservice Investments, a C$105 million investment in a passenger terminal at Billy Bishop Toronto City Airport, C$78 million in a 30MW wind project and C$75 million in a Canadian midstream energy services company.

The firm seeks investments with downside protection: assets that have long-term contracts, benefit from concession agreements or fall under regulatory regimes.