The Pipeline: Q3 boost for infra, DIF hires from GIG, I Squared’s healthcare platform

Infra tops the private markets pile, get set for hybrid fundraising and I Squared plots healthcare platform. Welcome to The Pipeline, the start-the-week briefing for our valued subscribers only.

First look

Gimme shelter
With the current health crisis still not under control, investors are increasingly turning to private markets for protection, bfinance found. The firm saw a 34 percent increase in the number of manager searches for illiquid strategies from its clients in the 12 months ending 30 September.

Infrastructure, which remains the most popular among the four key asset classes, saw an increase in manager searches in Q3, followed by private equity. That increase in activity was “counterbalanced by a reduced number of searches in real estate and mainstream private debt”, the investment consultant said in its Manager Intelligence and Market Trends report, released last week.

It probably comes as no surprise that within infrastructure, the “notable focus” is on regional strategies, renewables and infrastructure debt. In addition, investors turning to private markets in search of resilient yield are showing an increased interest in asset-backed credit in real estate and infrastructure, bfinance said.

First-time manager TILTing towards €140m first close
We provided an in-depth look at the challenges facing first-time managers, but several of these seem set to be overcome by Paris-based TILT Capital Partners, which expects a €140 million first close on its debut energy transition fund in December or early January, chief executive Nicolas Piau told The Pipeline.

Piau, who leads the firm alongside co-founders Nicolas Lepareur and Nathanael Krivine, quipped that a first-time fund in a normal environment is like “climbing Everest in flip-flops” – except in a pandemic it’s also doing so in the harshest of winters. However, backed by the European Investment Bank, the first close will leave it more than halfway to its €250 million target.

The trio launched the fund last year, having all worked in M&A at Engie. The vehicle will invest in companies in the energy efficiency space and in those providing flexibility solutions to the power sector.

“If you decarbonise only the generation, you leave a number of issues in the power system,” Piau added.

Hybrid fundraising is here to stay
TILT’s fundraising has been largely virtual, but will this trend carry on once we all return to ‘normal’?

One senior fundraiser is unequivocal in their answer: hybrid fundraising is here to stay. “Our business has fundamentally changed. This is a paradigm shift,” the fundraiser said.

Face-to-face interactions during fundraising will resume, our source argued, but within a more efficient system. For example, there’s no longer a taboo around initial LP meetings being done virtually. That means managers’ first roadshows could be done that way, followed by in-person meetings with LPs that are seriously considering a commitment. Once those are done, the remaining due diligence could be done virtually.

“There were so many aspects of fundraising that were inefficient and have now become much more efficient,” the source added.

At our recent Global Summit Online, futurist Ben Hammersley also argued there’s no going back to the old ways because the new ones are simply more efficient. Watch his thought-provoking presentation here.

Grapevine

“The idea of holding investments in a single vehicle with a 20-year view, an efficient fee structure and an ability to compound returns, is now an asset class”

Blackstone PE head Joe Baratta announces the birth of a new PE asset class that sounds suspiciously like infrastructure.

Who’s hiring

DIF gets energy boost from GIG
Caine Bouwmeester, who’s been with Macquarie since 2007 and became senior vice-president at Macquarie’s Green Investment Group in 2017, has joined DIF Capital Partners’ London office this month as managing director, “further strengthening” the firm’s global activities in renewable energy, DIF said in a statement.

He “has a track record of developing, acquiring and financing more than 2GW of wind and solar projects globally, enabling over €3 billion of investment,” it noted. Bouwmeester is the third addition to the DIF team in the past five months. In September, the firm hired Pierre Boschin as senior director in its investment team in Paris. Boschin was previously with M&A boutique Messier Maris & Associés, focusing on the utilities, energy and industrial sectors. And in July, the Dutch manager beefed up its investment team in Frankfurt, appointing Marcel Beverungen, from Rothschild, where he worked as director in its energy, power and infrastructure team.

Deals

New InfraRed fund sets sail
Britain’s offshore wind assets were once again trading hands last week as London-listed The Renewables Infrastructure Group bought a 14.3 percent stake in the 714MW East Anglia One site, which became operational in July, from the Green Investment Group,

Investing alongside TRIG was a fund managed by InfraRed Capital Partners, TRIG’s investment advisor. InfraRed European Infrastructure Income Fund 4, Infrastructure Investor understands, was launched earlier this year with a target of €1.5 billion and is believed to have reached a first close last month. Investors in the fund to date include the UK’s Greater Manchester Pension Fund, Korea’s KEB Hana and InfraRed’s parent Sun Life Insurance, according to Companies House data. InfraRed declined to comment on the fundraising process.

It is believed the fund will target core infrastructure assets, as well as renewables, focusing on yield and with the ability to invest independently as well as with InfraRed vehicles such as TRIG and HICL.

I Squared builds on European healthcare ambition
One sector still on the core-plus side but certainly in vogue, as detailed in our October cover story, is healthcare, and the European elderly care space has once again attracted the attention of I Squared Capital.

A little over a year on from its entrance into the sector with the acquisition of French residential care operator Domidep, the Miami-based firm is back in Europe, acquiring German care group Römergarten. The group has a portfolio of more than 2,000 beds across 20 sites and I Squared plans to grow this across Germany.

However, it also has a wider European portfolio in its sights. I Squared has a “strategic ambition to build a European healthcare platform of scale”, according to a statement from managing partner Adil Rahmathulla, all while “ensuring best practice and high standards of care for residents”.

Stay tuned, then.


Today’s letter was prepared by Zak BentleyBruno Alves and Kalliope Gourntis also contributed.

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