New GIP fundraising ‘definitely on the agenda’

Confirming an earlier report, a source says Global Infrastructure Partners is gearing up to start fundraising for its second infrastructure fund. The new vehicle is reportedly aiming for between $5bn and $6bn.

A few weeks after unveiling its new head of global fundraising and investor relations Global Infrastructure Partners (GIP), the independent $5.64 billion investment fund, is preparing to launch fundraising for its second infrastructure vehicle, a source familiar with the process said.

GIP: targeting $5bn to
$6bn for new infra fund

The source said the new fundraising is “definitely on the agenda” with a report in today’s Financial Times (FT) suggesting GIP will start fundraising this week.

According to the FT, GIP has set a target of between $5 billion and $6 billion for its second vehicle without seeking cornerstone investments from General Electric and Credit Suisse, which invested $500 million each in its first infrastructure fund.

GIP will benefit from an improving landscape as it starts fundraising for its second vehicle. Data from San Francisco-based placement agent Probitas Partners shows that infrastructure fundraising rebounded sharply in the first quarter of 2010, with infrastructure funds globally raising $5.9 billion, more than half the 2009 infrastructure fundraising total, in the first three months of the year.

The Abu Dhabi Investment Authority and South Korea’s National Pension Service – to which GIP sold minority stakes in London’s Gatwick airport earlier this year – are likely to be approached as sources of capital for GIP’s second infrastructure vehicle, the FT reports.

GIP had a busy 2009. In addition to acquiring Gatwick airport from Ferrovial-owned BAA for £1.5 billion (€1.6 billion; $2.4 billion), the fund also formed a $588 million joint venture with US natural gas producer Chesapeake Energy, invested $700 million in the Ruby gas pipeline, also in the US, and acquired 40 percent of Terra-Gen Power, a renewable energy producer in California and GIP’s first renewable investment.

The Ruby Pipeline has recently reached financial close with a seven-year, $1.5 billion debt facility provided by domestic and international banks. The loan is paying 300 basis points over LIBOR – the London interbank rate – for the first two years, 325 basis points for years three and four and 375 basis points over the last three years, assuming that $700 million of debt is refinanced by the end of the fourth year, GIP said in a statement.

As previously reported on InfrastructureInvestor.com, GIP recently added to its team and elected a new partner. Founding member Raj Rao has been elected as GIP’s newest partner, to be based in London. He will be responsible for the fund’s activities in the energy and wastewater sectors in Europe.

Susan Healy, a senior member of Babcock & Brown’s Capital Markets Group, is GIP’s new head of global fundraising and investor relations. Previously, Healy was head of investor relations at Carlyle for 13 years. The other senior addition to GIP is Gary Pritchard, formerly head of SABIC Innovative Plastics’ supply chain, where he managed over 5,000 employees.