All hail the king!

Following its recent disclosure that it had raised $7.5 billion for its second infrastructure fund, Global Infrastructure Partners (GIP) officially took the crown from investment bank Goldman Sachs for the largest infrastructure fund ever raised – and it hasn’t even finished fundraising yet.

GIP had gone to its backers – and got approval – to raise the hard cap for Fund II from $7.5 billion to more than $8 billion, a decision already vindicated. Raising hard caps can be tricky as it can mean scaling back the commitments of those who have already put money on the table.

While one has to be careful about extrapolating too much from GIP II’s ongoing fundraise, there are a few interesting takeaways for the asset class as a whole.

One is that independent fund managers are really becoming the elite of infrastructure general partners (GPs).

Up until now, the biggest infrastructure fund ever raised was 2006’s Goldman Sachs Infrastructure Partners I (GSIP I). But while its first fund was wildly successful, raising $6.5 billion, Goldman’s second infrastructure vehicle – closed in 2010, when bank-affiliated infrastructure funds were already falling out of favour with limited partners (LPs) – raised less than half that amount at $3.1 billion.

GIP is on the exact inverse trajectory, with its first fund clocking in at $5.64 billion and its second galloping towards a decisively larger $8 billion.

Another takeaway is that some in the LP community definitely feel that infrastructure investment is a proposition requiring some scale. When GIP won the vote to lift its hard cap, market sources told us that its investors were attracted to the idea of one fund having genuine firepower in a market where potential rivals are capital constrained.

That’s pretty much the same rationale behind the Global Strategic Investment Alliance (GSIA), an initiative championed by Canada’s $55 billion Ontario Municipal Employees Retirement System (OMERS), dedicated to investing in large-scale infrastructure opportunities.

GSIA aims to pool up to $20 billion from institutional investors to target these big-ticket deals, mainly across North America and Western Europe.

The platform – which recently reached a first close on, coincidentally, $7.5 billion – believes it will benefit from a favourable competitive environment given that few can play in an arena involving tickets of between $2 billion and $4 billion. Plus, OMERS says it has done extensive research on the returns generated by large assets and argues they outperform smaller assets.

But a third, more interesting takeaway, is that investors are committing capital to GIP at a rate to put high-flying, high-return private equity firms to shame.

That’s something that was flagged in conversation not long ago by an advisory source, who pointed out that LPs are placing a lot of faith in certain infrastructure GPs, committing the sort of capital that took private equity fund managers much longer to raise.


It took Permira, a well-known private equity outfit, 10 years to amass €14.2 billion in capital through various funds. GIP is close to raising $13.64 billion, or €12 billion, in four years via two vehicles. GIP’s fundraising prowess even compares favourably with bigger private equity names like Apax Partners, which took a decade to raise €23.5 billion. At this rate, it would take GIP eight years to surpass that figure.

It’s not just GIP either. The likes of Macquarie and Goldman Sachs also managed to amass large quantities of money for infrastructure in a comparatively short time span.

Given that many of these infrastructure funds have a longer life than your average private equity fund, it will take LPs longer to find out if their faith was warranted.

But for now, GIP shows that some infrastructure GPs are capable of attracting unprecedented amounts of institutional capital relative to their time spent in the fundraising market. It’s time to proclaim: all hail the king!