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The Pipeline: EQT’s Fund VI plans, ECP in rapid fundraising, Brookfield Transition moves for offshore wind

EQT to bring Fund VI in Q4, ECP nears $4 billion target and Brookfield’s Transition Fund eyes offshore wind. Welcome to The Pipeline, the start-the-week briefing for our valued subscribers only.

First look

EQT to hit the road again
It’s six months to the day since EQT closed its fifth infrastructure fund on €15.7 billion, but the Swedish group is hungry for more. It confirmed in its Q1 2022 report last week that it will be back in market in Q4 this year with EQT Infrastructure VI, with EQT Infrastructure V 70 percent to 75 percent invested at the end of the quarter.

No target size has yet been communicated to LPs, sources have told The Pipeline. But is there any chance of fatigue among LPs? Certainly not, according to chief executive Christian Sinding.

“We see quite a healthy demand from our clients for our flagship products. EQT is quite well differentiated,” he told an earnings call. “Our funds are performing exceptionally well, and have been doing so for a long time. We have a lot of credibility with our clients. Therefore, we are confident of meeting our goals.”

File under “unconcerned”, then.

ECP’s fifth flagship fund is halfway to hard-cap
The Pipeline understands that New Jersey-based energy investor ECP has raised $3 billion of its targeted $4 billion for its fifth flagship fund, ECP V. Already halfway to its hard-cap of $6 billion since launching the fund in December, the strong fundraising is a far cry from the disappointment of fund four.

The fund series targets deals in midstream,  environmental infrastructure, renewables and power generation. ECP’s last dedicated energy infrastructure fund, ECP IV, missed its $6 billion target when it closed in January 2020, raising just $3.3 billion. ECP’s consolation for the shortcomings saw it raise a co-investment pool alongside the fourth fund, which raised $3.5 billion.

It seems that renewed expectations have worked in the firm’s favour this time around – as well as, of course, the never-ending flows of capital towards energy transition strategies.

CIP’s fund adds fuel to energy transition fire
Copenhagen Infrastructure Partners has reached a first close of €375 million for its new green fuel fund, more than one-third of its €1 billion target.

The CI Advanced Bioenergy Fund has received commitments from Danish pension funds PensionDanmark and Industriens Pension, as well as from Sweden’s Andra AP-fonden and Fjärde AP-fonden, CIP said in a statement last week. Vestas, which acquired a 25 percent stake in CIP in December 2020, has also committed to the vehicle.

The fund will invest in projects that use sustainable feedstock, such as waste wood; agricultural, household and industrial biowaste to produce renewable natural gas, liquified natural gas and second-generation bioethanol.

CIP said it has already secured “an attractive portfolio” of development-stage projects in Europe – one of the two regions it will be investing in, North America being the other – with diverse exposure to feedstock, production technologies and offtake markets.

Banking on data
Record-breaking was the theme at a recent CBRE webinar discussing the European data centre market. Demand, take-up and, of course, valuations, were all posting historically high figures, with the latter catching the eye of Paul Mortlock, senior director at CBRE.

“In Europe, we saw at least two single-country platforms trade in excess of 30x EBITDA last year, which we’ve never seen before,” he said. “It’s predicated on growth.”

Such valuations haven’t yet become the norm, Sami Badri, technology analyst at Credit Suisse, told the webinar, although Badri did point out an interesting difference in how public and private markets approach the data centre sector. While public market actors are operating net debt to EBITDA ratios of 4.5 to 6 times, this reaches between 10 to 12 times for managers in the private markets.

“Public markets need to be perceived as investment grade security. Private markets are more specialised and can leverage a bit more,” Badri said.

Specialised or otherwise, here’s hoping those growth assumptions prove right.

Grapevine

“[Carbon offsetting] is like mugging a person on the street and paying someone else to go to jail while you go on holiday”

Mark Sait, chief executive of SaveMoneyCutCarbon, delivers a forthright assessment in Infrastructure Investor’s upcoming energy transition report.

Who’s hiring

Asterion beefs up leadership teamMid-market investor Asterion Industrial Partners has announced a strengthening of its senior team. Irene Otero has joined as an operating partner, having previously held positions at Macquarie, Thesis Energy, Morgan Stanley and Endesa, with extensive experience in the energy and utilities sector.

In addition, operating partner David Jones and partner and portfolio management committee chair Silke Scheiber have joined Asterion’s investment committee, which was previously formed by Asterion’s founding partners Jesús Olmos, Winnie Wutte and Guido Mitrani. There won’t be a back seat role for Otero. As Mitrani told us in a recent interview, Asterion’s operating partners are “fully integrated in everything that we do from a sourcing, diligence, execution and asset management perspective”.

The promotions and the hire of Otero follow Asterion’s acquisition of a 50 percent stake in Compagnie Electrique de Bretagne, the owner of the Landivisiau natural gas combined cycle power plant in Brittany, France, from TotalEnergies.

LP watch

GLIL bags record £1.2bn from its UK pension membersGLIL Infrastructure has scored its biggest fundraising since its 2015 launch, collecting £1.2 billion ($1.5 billion; €1.4 billion) from its UK pension members to take the open-end pool to £3.6 billion raised.

“This fundraising, our largest ever, reflects our members’ commitment to the asset class, but also their support for our proposition and investment strategy,” said COO Ted Frith.

That proposition has seen it mostly focus on core UK infrastructure, investing £2.1 billion across a portfolio of 13 assets. The latter includes stakes in Anglian Water, Clyde Wind Farm, Iona Capital, Rock Rail, Forth Ports, Semperian, Cubico Sustainable Investments, Agility Trains East, Smart Meter Assets, and Flexion Energy. Recently, GLIL closed its first investment outside the UK via a majority stake in a portfolio of 11 operational wind farms in Ireland.

GLIL counts seven UK pensions as part of its members, the most recent being NEST, the UK’s largest workplace pension scheme, which joined the pool last April.

Deals

Fair winds: Brookfield’s Global Transition Fund in offshore wind tie-up (Source: Getty)

Brookfield’s Transition Fund eyes Dutch wind
Brookfield Asset Management has entered into a 50-50 partnership with SSE Renewables to participate in the 1.4GW Hollandse Kust offshore wind farm zone tenders that are currently underway in the Netherlands, for the award of permits to develop two individual 700MW sites located approximately 53km off the Dutch coast.

Brookfield’s commitment to the partnership will come from its first Global Transition Fund, which the firm said in a statement is set to reach a close “in the coming weeks”, targeting $15 billion.

In a joint statement, the firms said they view the Netherlands as a “leading market” for offshore wind thanks to ambitious government targets and a focus on deploying innovative technology.

The Dutch offshore tender is BGTF’s second publicised deal attempt, after running into choppy waters in its approach for Australian utility AGL Energy.


Today’s letter was prepared by Zak BentleyBruno Alves, Kalliope GourntisDaniel Kemp and Isabel O’Brien also contributed.