GIP raises record $8.25bn

Global Infrastructure Partners’ second fund – the largest infrastructure fund ever raised – has reached its revised hard cap, bringing its assets under management to more than $15bn.

New York-headquartered Global Infrastructure Partners (GIP) has reached final close for its second infrastructure fund – GIP II – on $8.25 billion. In doing so, it becomes the largest fund in the history of the infrastructure asset class, beating the $6.5 billion raised by Goldman Sachs Infrastructure Partners’ first fund in 2006.

GIP’s debut fund closed on $5.64 billion in May 2008, beating a target of between $4.5 billion and $5 billion. Having used Credit Suisse’s placement arm to raise that fund, GIP then turned to former Babcock & Brown and Carlyle Group investor relations professional Susan Healy to spearhead fundraising for GIP II.   

Setting out with a $5 billion target into a tough capital raising environment, GIP II held a first close on just over $3 billion towards the end of last year. In May this year, it moved past its target when it held a second close on $5.5 billion. At this point, James Jenkins, a well-connected Wall Street veteran, joined the firm as managing director of investor relations to help market the fund to larger limited partners (LPs).     

In July, Infrastructure Investor exclusively revealed that the hard cap for GIP II had been raised from $7.5 billion to more than $8 billion following an investor vote. The decision to raise hard caps can be a controversial one as it can mean scaling back the commitments of those who have already put money on the table. In this case, market sources told us the vote went in favour of GIP because investors were attracted to the idea of one fund having genuine firepower in a market where potential rivals were capital-constrained.

Recent investors in the fund include Washington State Investment Board, which committed $250 million last month, and Virginia Retirement System, which wrote a $150 million ticket in August. Other investors include California Public Employees Retirement System, Florida State Board of Administration and the UK’s Shropshire County Pension Fund (see Infra Connect for further details). 

In April, GIP II wrote its first equity cheque when it acquired the UK’s Edinburgh Airport for £807 million (€990 million; $1.3 billion) – its third UK airport investment after Gatwick and London City. It followed this up with a $4 billion deal to buy pipeline assets from US oil and natural gas producer Chesapeake Energy Corp in July. Other GIP portfolio companies include Gatwick Airport, Port of Brisbane and the Ruby natural gas pipeline in the US.     

GIP II will target assets providing “essential services” in the energy, transport and water/waste sectors.  

“We believe that the well documented need for infrastructure investment across the globe will provide a very attractive investment environment for GIP II,” said the firm’s chairman and managing partner Adebayo Ogunlesi in a statement. “We look forward to the opportunity to continue to apply GIP’s differentiated model of value-added infrastructure asset management to generate attractive returns for our investors and create real value for all stakeholders.”