Macquarie halfway to $7bn-$8bn target for MIP VI – exclusive

Macquarie Asset Management has raised about $4 billion for its latest Americas-focused infrastructure fund, sources have told Infrastructure Investor.

The figure represents about half of the Macquarie Infrastructure Partners VI vehicle’s $7 billion to $8 billion target, although it is believed the firm has not yet held a first close for it. The fund was launched earlier this year and follows on from MIP V, which closed on $6.9 billion in August 2021, having initially targeted $5 billion. The fund is understood not to have a hard-cap in place.

MAM declined to comment on the fundraising.

As with the two previous vintages, MIP VI is targeting a net IRR of 10-12 percent. In a recent LP investor meeting seen by Infrastructure Investor, Karl Kuchel, chief executive of the MIP business, said the group has dropped the core/core-plus labelling of the fund, instead sticking to core-plus, given the respective return profiles. “It’s a recognition of where we are today and where we’ve been for some time,” he told the meeting.

Kuchel also revealed in the meeting that the 2013-vintage MIP III vehicle is generating a 16 percent net return, the 2018-vintage MIP IV a 12 percent IRR and 2020’s MIP V a 17.5 percent net IRR.

Kuchel indicated that growing portfolio companies’ EBITDA is a key part of the strategy. Indeed, on documents from the New Mexico State Investment Council, which committed $100 million to the fund in October, staff noted “the largest fraction of asset level returns [across MIP vehicles] is driven by improvements in EBITDA over the assets’ holding periods, in several cases offsetting modest declines in valuation multiples from entry to exit”.

Recycling capital

Infrastructure Investor understands that MIP VI has completed its first investment, following the announcement last week that MAM had bought DTG Recycling from Clairvest Capital. In a statement, Clairvest said it had received sale proceeds of $53.2 million, earning it an IRR of 88 percent and 6.2x multiple on its 2020 investment.

DTG Recycle is the largest recycler of construction, demolition, industrial and manufacturing waste in the Pacific Northwest, MAM said in a statement. MIP has had at least one waste investment in all its vintages, investing more than $4.5 billion in the sector.

MIP funds have traditionally invested in the transportation, waste management, utilities and energy, and communications sectors. MIP V, though, made an investment in Medical Properties Trust, owner of eight Massachusetts-based general acute care hospitals, marking its first social infrastructure deal. Social infrastructure investments will consist of between 5-25 percent of MIP VI’s investments, with the other four sectors slated for 15-35 percent, Kuchel told the investor meeting.

Through the MIP funds, MAM is also the largest private owner of US ports, while Kuchel explained that it is underweight in energy given potential exposures to commodity risk.

MIP VI will target up to 15 investments, a figure slightly higher than the 11 sealed by MIP V as a result of the larger fund size, Kuchel told the investor meeting, explaining his wariness of going up in both fund size and deal value size. Latin American investments can account for up to 20 percent of the fund, with MIP V’s last announced deal being the acquisition of a 50 percent stake in Latin American airport concessionaires Opain and Corporación Quiport from Odinsa, with MAM and Odinsa having earlier this year closed an agreement to establish a Colombian roads platform.