First look

Love in the Ares for climate fund
Ares Management is edging towards a close for its Ares Climate Infrastructure Partners fund, the Los Angeles-based group’s first dedicated vehicle to clean energy infrastructure. It disclosed in an SEC filing last week that it had raised $668.3 million for the 2019-vintage strategy. Although it has not disclosed a target, The Pipeline understands this to be $1 billion. It is believed Ares is planning a September or October final close as it awaits final commitments from LPs.

Ares did not respond to a request for comment. However, in an article for Infrastructure Investor in December, Keith Derman and Andrew Pike, partners and co-heads of Ares Infrastructure & Power, said the climate infrastructure landscape – covering renewables, battery storage and microgrids, electric transmission, vehicle electrification and energy efficiency – had “demonstrated a resiliency and downside protection not observed in other infrastructure asset classes”.

Well, perhaps apart from one other…

Digital infra: reasons to be careful
Investors may be rushing to grab a slice of the digital infrastructure pie, but there is plenty to consider before deploying capital. This was laid bare last week during a webinar hosted by the Global Infrastructure Investors Association entitled Digital Infrastructure – The Hidden Costs and Challenges for Investors. Below are three key takeaways to bear in mind:

• Some may regard digital infrastructure as a core utility today, but it faces technological risks many utilities do not as the world moves beyond 4G and into 5G and even 6G, said Sikander Rashid, managing partner, investments at Brookfield Asset Management: “Towers are the most de-risked part of digital infra, but counterparts like mobile providers have huge capex obligations that they cannot always afford.”
• Keep a close eye on the balance between investment and profitability, warned Cristina Gonzalez, managing director at KKR. She admitted this may sound obvious but said it was not always the case and that digital assets require more investment than some realise.
• Keeping it green will be the challenge for data centres, with their consumption potentially reaching 13 percent of the world’s electricity by 2030, according to Priya Veerapen, director in infrastructure debt and capital advisory at Deloitte.

AMP Capital takes aim in fund battle
The fight for AMP Capital’s Community Infrastructure Fund escalated last week, with the firm taking aim at Plenary Group’s PPP-prone business model as the latter continues with its bid to take over the fund.

In a letter to CommIF unitholders, AMP Capital issued a thinly veiled attack on its rival, noting: “It is our view that at least one of the third parties who has submitted a [takeover] proposal has a conflicted business model, as a developer with a captive fund.”

Warning investors that “there are currently no successful developer/sponsor-managed PPP funds in the Australian market”, the firm pointed out that its own independence from any one developer would ensure its ongoing commitment to acting in the best interests of the fund. With Morrison & Co and Palisade Investment Partners also said to be in the running to take over the vehicle, whether CommIF unitholders agree with AMP Capital remains to be seen.

Co-investment fund on track for Storebrand
Back in November, Norwegian pension and insurance group Storebrand was making its first significant infrastructure investment by acquiring a stake in AIP Management. Now it’s closing in on its €800 million target for the Storebrand Infrastructure Fund, with about €700 million raised for the co-investment vehicle, head of infrastructure investments Jo Gullhaugen told The Pipeline.

The capital has been raised primarily from Nordic investors, with Sweden’s church pension Kyrkans last month making a €70 million commitment. The fund plans co-investments in energy, transport, telecoms and social infrastructure in both the US and Europe. Investments in the latter region would contain a Nordic tilt, Gullhaugen said, as evidenced by Storebrand’s commitment to the recently closed Infranode II fund, as well as a strategic co-investment agreement.

“I’ve been working in the industry about 25 years and I have never launched a product that has received that kind of interest generally,” said Gullhaugen.

Well, that’s some endorsement.

Grapevine