“It was the best of times, it was the worst of times”, wrote Charles Dickens in the opening line of classic novel A Tale of Two Cities. Much the same can be said for the process of raising Dutch manager DIF’s second infrastructure fund (DIF II).
DIF II reached a final close on €571 million in September, collecting an additional €71 million over its original €500 million target. But the happy ending disguises an arduous period on the fundraising trail during two of the worst years in the history of financial markets.
Having reached a first close on €167 million in October 2008, DIF had only managed to raise an additional €110 million by December 2009, when it held its third close.
“We started talking to investors in April or May 2008 and we got positive answers from pensions and life insurers,” recalls managing partner Wim Blaasse.
“We even managed to reach a good first close in October 2008 with all investors staying onboard, although some ended up contributing lower amounts. But then, “for most of 2008 and 2009, fundraising literally stopped,” he added, claiming that it was quite an achievement to have ended 2009 with €110 million in new funds raised.
DIF’s luck would change in 2010 “when things started to pick up and we managed to raise almost €300 million in fresh money,” he said. “And we could have raised more but we had been fundraising for so long that our investors and management decided to make it a final close,” he added.
DIF II, which is already close to 50 percent invested and expects to have €400 million invested by the end of this year, has been able to take advantage of the opportunity provided by the ongoing financial crisis.
“In terms of our investments, things have been good,” says Blaasse. “There was (and still is) attractive deal flow, good pricing, not a lot of competition and not many people with liquidity in the market,” he reflects.
In the end, Blaasse attributes DIF’s success to its focused approach: “We are an independent fund focused solely on public-private partnerships and renewables and, as a result, our projects have proved quite stable during the crisis,” he explains.
With 70 percent of DIF II on track to be invested by the end of this year and an oversubscribed fund under his belt, expect Blaasse to get back on the fundraising trail sometime in 2011.