Actis reaches $750m for second infrastructure fund

The emerging markets-focused private equity firm fell 40 percent short of its target, due largely to a reduction in commitment size from anchor investor CDC Capital Partners.

Actis has held a final close on $750 million for its second infrastructure fund, Actis Infrastructure 2, falling short of its $1.25 billion target.

Robert McGregor, head of the firm’s Southeast Asia infrastructure team, told PEI Asia that the fund was unable to reach its intended target for two reasons. Firstly, the fund’s anchor investor, UK government-backed fund of funds CDC Capital Partners, was forced to reduce its intended commitment by $250 million, due to other commitments and funding priorities in the current environment.

Secondly, in order to avoid overlap, the fund began raising capital only after the firm's most recent private equity fund, Actis Emerging Markets 3 (AEM3), closed last November. “Unfortunately, that put us into fundraising mode at the onset of the financial crisis,” McGregor said. 

Nonetheless, besides CDC's anchor investment, the fund has garnered commitments from investors in Asia, Europe and North America. 

Infrastructure 2 will primarily target opportunities in power generation and transport. Actis expects between 40 percent and 45 percent to be invested in Asia and Africa each, with the remainder to be invested in Latin America.

“The fund is, however, global and can be invested wherever it makes the most sense to deploy it,” noted McGregor, adding: “Asia means South Asia and Southeast Asia – with an option to consider China.”

The fund has already made three investments. Two of these, Globeleq, a power generation company with assets in Africa, and Umeme, an electricity company based in Uganda, were CDC legacy assets used to seed the fund.

CDC, which Actis itself spun out of in 2004, was the sole investor in the firm’s previous infrastructure fund, a private equity infrastructure in which it invested $750 million. That fund, launched in 2002, was fully realised in 2007 at $1.7 billion, generating a 23.3 percent internal rate of return.

London-based Actis partners Michael Till and Torbjorn Caesar lead the 14-strong infrastructure team, which works out of offices in Singapore, Mumbai and London.

AEM3, a pan-emerging markets private equity fund, closed on $2.9 billion in November 2008, surpassing its $2.5 billion target. At the time of the fund’s close, it had already invested 12 percent of its capital in deals including the $700 million buyout of South African power sector equipment maker Alstom in August 2008.