Investors press Ardian to keep Fund V below €7bn – exclusive

The fund, currently sitting at around €6bn, lacks an official hard-cap, but has received market demand for as much as €12bn.

Ardian’s fifth European infrastructure fund is set to be kept below €7 billion following pressure from LPs to limit its size, according to several sources familiar with the matter.

The Paris-headquartered manager launched Ardian Infrastructure Fund V last year with a target of €5.5 billion, according to pension fund documents, following preliminary discussions earlier in the year around a target of about €4 billion.

However, Infrastructure Investor understands no official hard-cap has been set for the fund, leading to a number of LPs asking Ardian to not exceed €7 billion, due to concerns about size. Demand meant Ardian could have raised as much as €12 billion, according to sources. One of the sources highlighted the hard-cap was more “fluid” in nature and has been kept below €7 billion following regular interaction with the firm’s investor base.

The fund remains open and is believed to have raised about €6 billion to date. Sources told Infrastructure Investor that Ardian remains in discussions with one or two larger potential investors before closing. In a year expected to exceed previous fundraising records, Ardian’s fund would be the largest ever Europe-dedicated vehicle.

Ardian Infrastructure Fund V is targeting a net IRR of 10 to 13 percent, with a hurdle rate of 7 percent and a 15 percent carry. Fees are set at 1 percent for commitments below €100 million, 0.9 percent for commitments between €100 million and €200 million and 0.8 percent for those over €200 million.

Investors in the fund include the Employees Retirement System of Texas (€100 million), Taiwan Life Insurance (€40 million) and Cathay Life Insurance (€40 million).

Ardian declined to comment.

Over $80 billion was raised by infrastructure funds in 2018 in what was a record year, according to Infrastructure Investor data. The three largest funds raised last year by KKR ($7.4 billion), Stonepeak ($7.2 billion) and I Squared ($7 billion), all had their hard-caps increased.

“[Hard-caps] are often imposed by the initial investors in a fund, who don’t want too much scope creep in terms of the scale of deals done and to try to keep things to the mandate they were committing to,” James Wardlaw, head of infrastructure at placement agent Campbell Lutyens, told us last year.