Investcorp, Aberdeen target GCC infra with $1bn fund

Bahrain-based private equity firm Investcorp and UK-based Aberdeen Standard Investments have teamed up and are looking to raise between $800 million and $1 billion for a new fund that will invest in social and core infrastructure projects in the Gulf Cooperation Council countries.

A first close of between $250 million and $300 million is expected by this summer, with the bulk of capital raised coming from investors in the region and Asia, Sami Neffati, who will serve as managing partner of the fund, told Infrastructure Investor. “But ultimately, there will be investors from Europe and the US,” he added.

The joint venture will actively target greenfield and brownfield opportunities in a number of sectors including health care, education, utilities, social housing, smart cities and transportation, Investcorp said in a statement.

Asked whether the fund would invest beyond the Gulf region, Neffati responded: “The majority of the fund will be deployed in the Gulf countries, but we’re also thinking about places like Jordan, Egypt, Turkey, Tunisia and Morocco. We would probably invest up to 15 percent of the fund in these jurisdictions.”

Neffati, who until recently served as assistant general manager, energy and natural resources at Sumitomo Mitsui Banking Corporation, will lead a team of six or seven professionals.

The team, which will be independent, “will benefit essentially from the long experience of ASI in infrastructure investment – this being their 12^th fund – and also, we will benefit from Investcorp’s relationships in the region,” Neffati said. “We think that will be extremely helpful in allowing us to tap into a pipeline of deals that is really proprietary and not accessible to other investors.”

The average ticket size for each investment will range between $30 million and $50 million. As for the fund’s lifecycle or investment horizon, Neffati could not discuss details at this time other than to say that “it will be long enough to be viewed as a proper and legitimate infrastructure endeavour rather than a [short-term] private equity sort of set up”.

The announcement comes less than a month since sister publication Private Equity International reported that Investcorp was considering the launch of an infrastructure business.

“We have had a large number of traditional LPs reaching out and saying, ‘Do you have vehicles we can invest in?’” Hazem Ben-Gacem, Investcorp’s co-chief executive, said at the time. “We may explore something on that front hopefully not in the too distant future. It’s an evolution of our business model.”

For Aberdeen Standard Investments, the asset management business of life insurer Standard Life Aberdeen, the partnership will allow it to expand its geographic footprint. The firm, which resulted from the merger between Standard Life and Aberdeen Asset Management in 2017, had £557.1 billion ($718.7 billion; €636.0 billion) of assets under management as at 30 June 2018. It did not respond to a request for comment.