Partners Group, a Swiss private markets investment manager, is raising two global infrastructure funds, according to research house Preqin, and hopes to raise at least €1 billion ($1.12 billion) for each one.
The firm, which has $6 billion invested in infrastructure assets of its $55 billion under management, opened both vehicles for capital last year. One of the vehicles is an ‘integrated fund’, which invests in direct, primary and secondary assets, and the other a direct investment strategy.
Partners Group declined to comment on the planned date for closing or how much it has raised so far.
As of end-2015, clients in Asia and the Middle East accounted for 8% of the firm’s total AUM, and Australia for 4%. Europe accounted for around 70% and the Americas the remaining 18%. The figures also reflect the geographic breakdown for the infrastructure business.
AsianInvestor spoke to Brandon Prater, London-based co-head of infrastructure at Partners Group, about the firm’s fundraising and investment strategy.
Q What would be a typical infrastructure fund size for your firm?
The last fund we closed was a global infrastructure fund at €1 billion in 2014, and we’d expect the next one to be at least as big as that. As we see the opportunity set increasing globally, we would seek to raise enough capital to take advantage of it.
But let’s put this in context. In infrastructure, the largest funds raised recently have been in excess of $10 billion, and one was closer to $15 billion. [Canada-based manager Brookfield closed a $14 billion strategy in July.]
We’re not looking at that sort of size, nor are we looking at those sort of deals. You can feel pressure to deploy when you’ve got much bigger funds, because you may have capital overhang.
Q What’s your typical deal size?
It’s €200 million to €300 million. You have to remember that infrastructure is supposed to be the safer end of the spectrum of private markets. So we don’t want to take very large, concentrated risks.
For example, a government could decide suddenly to change tariffs on a natural gas network or renewable energy source. Obviously you think hard about the potential for that to happen, but sometimes you can’t see it. So taking a $500 million bet on one deal is not something that we generally feel comfortable doing.
Q You’re presumably looking to identify assets as you raise money?
Yes, we actually invest while we’re raising capital. By the time we do a press announcement about a fund close, we will usually have deployed a significant amount of it.
I’d like to think that’s the norm, as you’d expect people to be able to show a track record and also how they are going to spend the money – either an identified pipeline and maybe even some actual investments being made.
Q What about smaller ticket sizes, say €100 million or below?
Yes, we’d do that if we feel like there’s value and we can build a platform out of our original investment.
Q Do you see you Asian client base growing as a proportion of the whole?
It has the potential to grow. Based on meetings I’ve had in Asia, I would say that infrastructure is an asset class that people are exploring more, but I don’t think a large number of pension funds and insurance companies have invested in it outside of their own domestic markets.
So Korea and Japan, for example, have decent size infrastructure bases, but investors tend to invest in local assets or with domestic companies that invest abroad. But they do support some of the big names in Asian infrastructure as well, such as Macquarie.
Look out for another article in the coming days about the kind of investments that Partners Group has made and is looking to make.