Macquarie Infrastructure and Real Assets has collected $3.98 billion in commitments for the firm’s fifth North America-focused infrastructure fund.
The fundraising total so far, which was reported in a regulatory filing earlier this week, puts Macquarie Infrastructure Partners V at close to 80 percent towards the investment vehicle’s $5 billion target, a source familiar with the matter told Infrastructure Investor. The fundraise began in April, when Macquarie first submitted a filing for MIP V, and the fund held its first “interim” or “soft” close in early May on $3 billion, the source explained.
Around 60 percent of the capital committed so far has come from investors that previously invested in MIP strategies, the source said.
Macquarie’s current vintage is targeting 10-12 percent net returns, according to documents published by the Arkansas Teacher Retirement System, which committed $50 million to the fund.
Other known commitments to the fund so far include $25 million from Chicago Teachers’ Pension Fund, $100 million from the North Dakota Retirement Investment Office and 160 billion Korean won ($135 million; €115 million) from the National Pension Service of Korea.
LP documents also reveal MIP V’s fund terms, which include a 0.75 percent management fee on uninvested capital – with a 50 percent discount for first-close investors; and a 1.5 percent fee on invested capital. The firm is also offering lower management fees to LPs based on commitment size: 1.25 percent for more than $100 million, 1.15 percent for more than $200 million and 1.05 percent for more than $300 million.
ATRS cited the shorter investment period of four years and the lower management fee on uninvested capital as strong selling points, particularly given “a competitive environment where capital deployment could be slower”.
It also noted the fund’s size which is the same as its predecessor – MIP IV closed in January 2019 on its $5 billion hard-cap – which allows the firm to stay within its mid-market mandate compared to peers who have raised significantly larger vehicles than their predecessor funds.
For MIP V, Macquarie aims to create a portfolio of seven to 10 companies with ticket sizes ranging between $250 million and $750 million. Larger deals are also possible through co-investments. The fund will invest primarily in brownfield assets in the transportation, waste management, utilities, energy and communication sectors with no more than 25 percent of MIP V’s capital backing greenfield assets. While the fund will invest primarily in the US and Canada, it will also be able to invest up to 20 percent in Latin America, mainly Mexico and Brazil.
According to the LP documents, MIP IV is more than 90 percent committed to nine portfolio companies.
As of 30 September, MIP III, which closed in 2014 on $2.6 billion, is largely invested and returning 13.4 percent, while MIP II closed in 2010 on $1.6 billion, was generating an 8.3 percent return and is in the divestment stage. The inaugural MIP vehicle has a net return of 8.1 percent after raising $4 billion in 2007.
Macquarie declined to comment for this story.