SL Capital plots second infra fund this year

The vehicle is set to pursue a strategy largely similar to that of its mid-market predecessor, although it could be euro-denominated following robust interest from Japanese LPs.

UK-based SL Capital is planning to launch a second infrastructure fund later this year, just months after closing its debut vehicle, sources told Infrastructure Investor.

The Standard Life subsidiary is believed to be targeting a launch of the fund in either the third or fourth quarter of this year. It would seek to raise an amount on par with the £516 million ($667.7 million; €614.7 million) it collected for its debut mid-market infrastructure platform, closed in February.

A similar strategy of targeting mid-market core brownfield infrastructure investments in the UK and northwestern Europe is also understood to be on the agenda, maintaining the fund’s net IRR goal of between 8 percent and 10 percent.

However, in contrast to the first fund, which was sterling-denominated and based in the UK, the second vehicle could be launched through a SICAV-type structure in Luxembourg and be euro-denominated. While this is believed to still be under consideration and subject to change, the move would meet the demands of the Japanese investment community, which has expressed strong interest in such a structure.

SL Capital’s first fund drew interest predominantly from UK local government pension schemes, with additional commitments from European pensions and insurers. The successor is also expected to secure funds from Canadian and Australian investors.

The firm is still deploying its first vehicle, which is currently just under 50 percent invested, although sources said a new investment is in advanced stages and could be agreed by the end of the summer, bringing the fund’s total deployments to about 70 percent. The fund manager is said to be eyeing investments in oil storage and gas transmission, as well as continuing to build up its rolling stock portfolio in the UK and its hydropower presence in Norway.

SL Capital declined to comment.