Partners Group has raised a total of $8.5 billion for its latest infrastructure fund programme, more than double the amount amassed for its previous programme, which closed four years ago.
The Switzerland-headquartered firm had a target of $5 billion for its Direct Infrastructure 2020 fund, the third vintage of the strategy. This target was beaten to raise $6.4 billion, while a further $2.1 billion was amassed through separate accounts and bespoke solutions to add to the capital pool. The fund’s predecessor – Direct Infrastructure 2016 – took a similar approach, raising €2.2 billion via the main fund and a further €800 million from separate accounts.
Partners Group has always raised its funds through both euro and dollar sleeves, explained Todd Bright, partner and head of infrastructure in the Americas, with a majority of the capital now coming through in dollars.
“We’ve had material progress on the US side,” he told Infrastructure Investor, with about one-third of commitments coming from outside Europe. “The lion’s share of the capital still comes from our longstanding legacy clients, mostly in Europe, but for this fund we’ve raised much more money in the US than we have before.”
About 45 percent of the capital has been committed to date including in Unity Digital, a wireless telecommunications infrastructure platform in the Philippines, a new country for the Partners Group infrastructure team. Other investments include Dimension Renewable Energy, a distributed energy platform focusing on community solar and battery storage in the US, as well as Gren, a district heating platform in the Baltics.
“We continue to be more thematic in our investing. In the past, there was probably a larger component of opportunistic investing in those funds and now we’re almost exclusively focused on themes,” said Bright. “Infrastructure investing is hard enough if you don’t have the tailwinds of being on the right side of transformative trends.”
These trends include focusing on digitalisation, automation, decarbonisation and what Partners Group described as “new living”, which has included deals such as Parmaco, a provider of modular educational buildings in Finland and Milestone, a transportation equipment provider in the US. Partners Group has traditionally invested in deals comprising equity from more than one of its private markets strategy, such as private equity and real estate.
In the group’s December outlook for 2022, Partners Group assessed the digital infrastructure sector, noting that “sector valuations have skyrocketed”, and Bright said the firm invests cautiously with regards to this matter.
“We have always looked at this low interest rate with a lot of caution. We’ve always set up our portfolio and made our investments with a return for the long-term,” he maintained. “We think we’re headed into a period of sustained higher inflation and think that has and will impact valuations. That’s where the strategy comes into play as we’re investing in these themes.”
The Direct Infrastructure 2020 programme targets net returns of between 8 percent and 12 percent, with a cash yield of 6 percent. The previous vintage is generating a net IRR of 15.5 percent and a multiple of 1.5x, Partners Group said in a statement.
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