In what was an oversubscribed, mostly European fundraising, Dutch fund manager DIF has closed its third infrastructure fund on €800 million, although it had the chance to raise even more.
“We could have raised over €1 billion,” managing partner Wim Blaasse told Infrastructure Investor. “We raised our hard cap to accommodate investors still doing due diligence. But in the last months [of fundraising], we had to turn down some investors.”
DIF started fundraising for its third infrastructure fund last January, targeting €600 million with a hard cap of €750 million. It reached a first close in May 2012 and earlier this February had already beaten its €600 million target.
Blaasse said Fund III’s limited partners are mostly European – “after our first close, we decided to stick to [fundraising] in Europe” – with the fund scoring a re-up rate of 70 percent. Akin to AXA Private Equity’s (AXA PE) third infrastructure fundraising, DIF Infrastructure III also attracted a significant number of German LPs.
“Around one-third of the capital in Fund III is coming from Germany – basically from pension funds and insurance companies,” Blaasse said. AXA PE head of infrastructure Mathias Burghardt went as far as saying “Germany is the new giant in infrastructure investing – both on the pensions and insurance side”.
DIF’s fundraisings have been getting increasingly larger since it closed its first fund on €121 million in 2006. The company now manages €1.6 billion in equity. Blaasse partly attributes this to DIF’s brand name – “we started eight years ago and we now have a track record in the market” – as well as the current market dynamics, where there is “more appetite for low-risk strategies producing steady yields”.
But whereas DIF’s fundraisings have grown progressively bigger, its strategy of targeting primary and secondary opportunities – on a roughly 50/50 basis – across the public-private partnership (PPP) and renewable markets hasn’t changed.
DIF’s traditional European playground is still offering plenty of opportunities, although some countries have shifted up the deal ladder when compared with others.
“France is still active, but the deals are smaller-to-mid-sized and not large-scale anymore. Belgium and the Netherlands are active and I’d say they are much more important markets than now than they were three years ago. There are only a few opportunities in Germany – mostly in the transport sector – but then again we are involved in most of them,” Blaasse said.
He continues: “The UK is a bit of a question mark these days. We were involved in the Crossrail rolling stock PPP, but that was cancelled. We were also analysing some waste-to-energy deals that got their PFI credits withdrawn.”
And then, of course, there is Canada, where DIF opened an office last October. “We see traction on the PPP side and we are currently preferred bidder on a renewable deal. One of the reasons we moved to North America was to diversify further as markets come and go, although Europe still offers enough opportunities,” the DIF head highlighted.