Newcomers help AXA top €1bn for close of second infra debt fund

The fund exceeded its target by more than €200m, with over 40% of investors debuting in infra debt.

AXA Investment Managers has closed its second infrastructure debt fund, raising €1.05 billion.

European Infrastructure Senior 2 exceeded its initial target of €750 million, picking up 75 percent of its commitments from European investors, with the remainder coming from Asian LPs. Bertrand Loubières, head of infrastructure finance at AXA IM, told Infrastructure Investor that more than 40 percent of investors in the fund were making their first moves in infrastructure debt.

“When it comes to Asian – and Japanese investors in particular – this is a result of work done about four years ago,” he said. “There’s been a constant exchange of discussions over time, demonstrating track record and rationale. We had to accompany them in the thinking and the discussion about infrastructure debt as an asset class.”

The fund was launched in late 2018 and followed AXA’s debut European Infrastructure Senior I vehicle. The latter was launched in 2016 and closed on its target of €1.2 billion.

The lower target for the second fund was due to a slight strategy shift, Loubières explained, with EIS II targeting floating rate investments and its predecessor investing in fixed-rate deals.

“Institutional demand for floating rate assets is a bit less than [for] fixed-rate,” he said. “At the European level, institutional investors who had come to the asset class had mostly only considered fixed-rate assets. It was to convince them it was a good product and it was just the start for some investors.”

The fund has done six investments to date, making it 15 percent deployed at close. Investments have included rolling stock, renewables and digital infrastructure. Loubières said that despite investing before the covid-19 outbreak, it does not have any assets directly impacted by the pandemic.

“We have highly structured assets which can withstand a crisis,” he said. “In terms of pricing, we saw a spike within the first four weeks but spreads have tightened since, precisely because the asset class has proven resilient.”

The AXA IM infrastructure debt portfolio now totals €7.3 billion, the manager said in its statement, with the Nordics and France accounting for 21 percent and 20 percent of deals respectively.