Asian LPs pile into Macquarie’s new €6bn fund

Macquarie Infrastructure and Real Assets has reached a final close for its sixth European Infrastructure Fund on its hard-cap of €6 billion.

This is €1 billion more than its target and a 50 percent increase on its €4 billion predecessor, MEIF 5, which closed in September 2016.

Macquarie said the fund secured a 65 percent re-up rate and that a majority of its investors came from Europe. The Greater Manchester Pension Fund committed €80 million, according to pension documents.

The firm also said that a “significant portion” of the LP base came from Asia-Pacific. Known investors are China Life Insurance (€30 million), Fubon Life Insurance (€200 million) and Shin Kong Life Insurance (€65 million). Limited partners from the APAC region represented 41 percent of investors, with Europe and North America comprising 51 percent and 8 percent respectively, a spokeswoman for Macquarie said.

Investors from North America include the Teachers’ Retirement System of Illinois (€200 million) and McGill University in Canada (€15 million), with the latter also setting aside €5 million for co-investments.

“Many Asian investors have a growing balance sheets and are increasing their percentage allocation to alternatives and real assets,” Leigh Harrison, head of MIRA EMEA, told Infrastructure Investor. “To the extent when they’re allocating capital to alternatives for the first time, infrastructure resonates well and in addition they often want to invest in mature economies such as western Europe..”

Macquarie’s total raise for co-investments totalled €800 million, a substantial increase on the little over €300 million it raised for co-investments for MEIF5.

“It reflects a growing interest for investors who are seeking access to co-investment particularly where they may not have the resources to invest directly,”” Harrison added.

Unlike MEIF5, which held a first and final close, MEIF6 held a first close on about €3 billion towards the end of 2018 and waited for investors that weren’t able to commit at the end of last year, Harrison said.

MEIF6 agreed its first deal in March, which would have seen the fund invest in Magma Sweden, a company with a portfolio of operational and development renewable energy projects in Iceland.  However, the transaction did not go ahead as an existing partner exercised pre-emption rights. Earlier this month, MEIF6 made a  £563 million ($706.3 million; €631.4 million) offer for UK-based telecoms group KCOM, despite pension fund USS having previously agreed a deal for the company in April.

The fund will invest in utilities, transportation, communications infrastructure and renewables in Europe.

Macquarie’s suite of European infrastructure funds has now raised over €20 billion since MEIF1 was launched in 2005. The latest divestment came in April when a 36 percent stake in Brussels Airport held by MEIF2 and MEIF3 was sold to a consortium comprising QIC, APG and Swiss Life.