GIP to consider raising its largest infrastructure fund

New York

GLOBAL Infrastructure Partners (GIP), an owner of London's Gatwick Airport, has started talking to investors about a potential infrastructure fund that could eclipse the record US$15.8 billion pool it finished raising last January, according to people familiar with the matter.

The New York-based firm began discussions on the possible fund - whose target could reach or top US$20 billion - with a group of the largest clients in its current vehicle at a dinner it hosted in Berlin last month, said some of the people, asking not to be identified because the information isn't public. The firm is seeking anchor commitments before formally launching a fundraising process.

A GIP representative declined to comment.

GIP focuses on projects in the energy, transport, water and waste industries and has been putting money to work at a fast clip. Earlier this year, it teamed up with investors to acquire renewable-power specialist Equis Energy for US$5 billion, and it has a pending deal to buy Italian high-speed train operator Italo for 1.98 billion euros (S$3.19 billion).

Over time, its funds have grown in size: the first two totaled US$5.64 billion and US$8.25 billion, respectively.

Unlisted infrastructure is increasingly attractive to institutions such as pension funds and sovereign wealth funds, in part because returns are uncorrelated to stocks and other asset classes. Assets swelled to US$418 billion as of June 2017, more than four-times the level of capital dedicated to the sector a decade earlier, according to data provider Preqin.

A relatively short pause between funds wouldn't be unprecedented. Brookfield Asset Management Inc is set to begin raising its fourth infrastructure fund later this year, other people familiar with the matter have said. Brookfield may gather US$20 billion, compared with US$14 billion for its third fund in July 2016.

GIP and Brookfield have amassed two of the largest infrastructure funds on record. They're unlikely to be displaced any time soon, though Blackstone Group LP has a US$40 billion target for its new infrastructure pool. BLOOMBERG