Pantheon targets $1.2bn for third infrastructure fund

Some $80m of commitments have begun to roll in from UK and US pension funds for the vehicle.

London-based investment firm Pantheon Ventures is currently fundraising for its third infrastructure fund, seeking $1.2 billion of commitments.

The target for the Pantheon Global Infrastructure Fund III was disclosed by the UK’s Surrey County Council Pension Fund, which is set to approve a $40 million investment in the new vehicle at its committee meeting next week.

Surrey’s commitment will supplement the $40 million approved to Pantheon by the US-based Tacoma Employees’ Retirement System last month and is double the amount it invested in Goldman Sachs’s West Street Infrastructure Partners Fund III at its previous meeting in June.

The focus of the latest Pantheon offering is set to be on infrastructure secondaries and co-investments across developed markets. The vehicle will “aim to capitalise on investment opportunities arising from infrastructure deficiencies, government policies supporting infrastructure investment and a growing range of mid-market opportunities coming from the private sector”, according to the Surrey fund.

Pantheon also believes it can reach assets through the secondary market of the same quality as those found in the primary direct market, but at more attractive prices.

A combination of core and core-plus investments are set to be targeted across conventional and renewable energy, communications assets, transport, water and social infrastructure – primarily through brownfield opportunities.

While a target IRR has not been disclosed for the fund, Pantheon’s 2009 vintage, $350 million debut global infrastructure vehicle is generating a net 13.1 percent return, while its overall infrastructure programme across commingled and separate accounts has a net IRR of 14.5 percent. The firm was bought by Affiliated Managers Group in 2010 and raised $1 billion for its second infrastructure fund in 2014.

The new 13-year fund will have an average annual fee of 73 basis points on committed capital with a carried interest charge of 10 percent. According to the Surrey pension, closes are scheduled for October, November and December 2017.

Pantheon has made 59 infrastructure investments totalling $1.7 billion since its inception, spread across 25 secondary and 13 co-investment deals.

Pantheon declined to comment.