First look

Ancala nears Fund III target with $1.1bn raised
London-based Ancala Partners is edging towards a final close for its third mid-market fund, having raised just under $1.1 billion of its $1.3 billion target, according to SEC documents.

Ancala Infrastructure Fund III, which was launched towards the end of 2021, is understood to have held a first close above the €1 billion mark (while the fund is raised euro-denominated, it’s quoted on the SEC filing in dollars). A final close is targeted for the summer, The Pipeline understands. Ancala declined to comment on the fundraising.

The fundraising comes amid the departure last month of investor relations director Mathias Lejeune to CBRE IM to become senior director driving capital-raising efforts for the group’s infrastructure programmes.

Ancala’s previous fund closed on €735 million in February 2020, exceeding its €600 million target.

TPG Rises to the climate infra challenge
TPG is pitching a Rise Climate Infrastructure fund to LPs, CFO Jack Weingart said on the firm’s year-end results call last week. This would be the fifth product in the firm’s impact series and marks the Rise strategy’s first foray outside private equity. It comes amid a PE fundraising environment beset with challenges that CEO Jon Winkelried acknowledged TPG is “not immune to”.

Speakers on the call did not disclose a target for the infrastructure fund. TPG is also raising Rise III, which has a $3 billion target and reached a first close last August on $1.55 billion. The firm expects to keep Rise III open throughout 2023, as well as other private equity funds, “given ongoing challenges in the fundraising market”, Weingart said, adding: “It’s too early to tell whether we’ll hit all of our targets.”

Now there’s a comment you wouldn’t have heard in early 2022…

Automatic for the people
LPs have long been grumbling about the longevity – or lack thereof – of infrastructure funds, and the industry has slowly but surely attempted to rectify the situation. The rise in evergreen vehicles, for instance, can be attributed to this.

The Pipeline, however, is told of one GP employing some outside-the-box thinking to try to solve the asset-fund life mismatch. Its solution? Inserting automatic continuation vehicles into a fund’s charter. This means said GP could unilaterally decide to roll over an asset into a continuation fund without the express consent of the fund’s LPs.

Needless to say, LPs weren’t thrilled with this idea, and so the concept was dropped. But should we expect more clauses surrounding continuation vehicles to pop up in future fund charters? Our source pondered the possibility of GPs putting in place clauses they could unilaterally trigger to force an LP vote on the launch of a continuation fund.

A little less forceful? Let’s just say, LPs might want to keep an eye on the small print.

CapDyn feeling the Texas freeze
You may recall the February 2021 storm in Texas that left many of the state’s wind farms unable to fulfil their contracted swaps. Capital Dynamics was one of several GPs to pen a letter to Texas grid operator ERCOT describing an energy industry “severely financially harmed as a result of an unforeseeable administrative change to ERCOT’s pricing structure and the operation of ERCOT’s Protocols on a moment’s notice”.

That harm is apparently being demonstrated in CapDyn’s performance. The UK’s Brent Pension Fund, which invested in the firm’s 2010 maiden Clean Energy and Infrastructure fund, revealed in documents last week that the $462 million vehicle is displaying a -5.4 percent net IRR, as of 30 September 2022, as a result of “challenges experienced by one project” in Texas and which “represents a material proportion of the fund”.

The unnamed project is believed to be the 300MW Green Pastures site it closed on in 2014, its fourth-ever wind investment.

CapDyn declined to comment.

Grapevine

“Not only have the Tories sold off our water, our power, our distribution networks, but they’ve allowed billions and billions of pounds every year of operating profits to disappear overseas”

Richard Tice, leader of the right-wing political party Reform UK, lashes out at foreign ownership of UK infrastructure

Who’s hiring

Going, going… Anand gone
As of the beginning of this month, Saurabh Anand – a former managing director at Denham Capital – has started a new position with The Carlyle Group as a managing director for its global infrastructure business.

The Pipeline understands Anand will report to Andrew Kapp, a managing director and partner for Carlyle’s global infrastructure business who was brought on to the team in 2022.

Anand is not replacing a departing colleague and, much like Kapp, his hiring is indicative of Carlyle’s efforts to grow and bolster its infrastructure business. Anand will be focused on renewable energy and the energy transition in his position, two themes he covered extensively during his 16 years at Denham.

Carlyle’s infrastructure and energy portfolio appreciated 48 percent in 2022, it revealed recently. Looks like Anand will be joining a value-add team.

LP watch

International Aware-ness
Australian superannuation fund Aware Super, one of the country’s largest with A$150 billion ($103 billion; €97 billion) in assets under management, is making a move offshore with an eye on real assets.

Deputy chief investment officer Damien Webb, based in Sydney up to now, has taken on a new role as head of international. He will lead the superfund’s first office in Europe, slated to open in the coming months in a location to be confirmed. Webb will also act as executive lead for the fund’s international expansion, building its presence in the Old Continent and other offshore markets over time.

It is expected that real assets, including infrastructure and real estate, will form a significant part of the fund’s focus overseas. The larger superfunds are naturally looking more closely at offshore opportunities thanks to the high level of competition in their home market for any assets of sufficient scale that are put on the block.

Deals

One giant leap for standalone battery storage
A US-based renewables group owned by Global Infrastructure Partners has secured the first-ever tax equity financing to take advantage of tax credits for standalone battery storage projects introduced in last year’s Inflation Reduction Act.

Eolian – formerly the renewable energy business of MAP Energy before GIP’s acquisition in December 2020 – secured the tax equity funding from Churchill Stateside Group for the Madera and Ignacio projects. The sites are both 100MW in capacity and while they sit as standalone projects, will act as an interconnected entity. Based in Texas, they will enter the state’s ERCOT grid on a fully merchant basis, making the overall 200MW capacity of the units the largest fully merchant battery storage project in the world.

“This [fully merchant revenue profile] was intentional,” Aaron Zubaty, Eolian founder and chief executive, wrote on LinkedIn. “Energy storage is not and should not be lumped with contracted renewables. The financing of energy storage assets must accept that it is a volatile business to be the glue that provides true system resiliency.”

Go merchant or go home.

I Squared swoops in on Whistler Pipeline
I Squared Capital has acquired a majority stake in the US-based Whistler Pipeline via the firm’s $15 billion Global Infrastructure Fund III.

It snapped up the controlling stake from Stonepeak, First Infrastructure Capital, Ridgemont Equity Partners, West Texas Gas and the pipeline’s management team, WhiteWater, with the latter expected to retain a significant stake in the asset.

The intrastate pipeline, which spans roughly 450 miles, transports natural gas from the Permian Basin to Agua Dulce, Texas. Aiming to meet growing demand for natural gas in the Gulf Coast and Mexico, with most of its current two billion cubic feet per day capacity locked into long-term, fixed-fee minimum volume agreements with investment grade counterparties.

Last year, WhiteWater and a joint venture between Stonepeak and West Texas Gas reached a final investment decision to move ahead with the expansion of the pipeline, which will see current capacity increase to 2.5 billion cubic feet per day before the end of the year.

Plenty of tune left in the Whistler, then.

Today’s letter was prepared by Zak Bentley. Bruno Alves, Daniel Kemp, Tharshini Ashokan and Isabel O’Brien also contributed.