Colonial First State Global Asset Management (CFSGAM) is planning its second global infrastructure fund.
The Sydney-based manager, owned by Australia’s largest bank, Commonwealth, is looking to raise A$3.1bn (€2bn) for the vehicle.
CFSGAM is expected to start preparations for the new fund, to be known as the European Diversified Infrastructure Fund 2, or EDIF 2, in its current financial year ending 30 June.
Perry Clausen, global head of unlisted infrastructure at CFSGAM, told IPE Real Estate: “EDIF2 is now under consideration, and we are sounding out the market with current and prospective investors.”
CSFGAM, which manages almost A$200bn on behalf of institutional investors, pension funds and other clients, runs a large suite of funds, including its 15-year European Diversified Infrastructure Fund (EDIF) 1.
The decision to launch EDIF2 follows the final close of EDIF1. It reached its hard cap of €2bn, exceeding the target fund size of €1.5bn, in January last year.
In that raising, EDIF1 received €721m of additional commitments over a six-month period.
Almost 50 European, Asian and North American institutions, including insurance companies, pension funds and sovereign wealth funds, invested in EDIF1.
Since inception in August 2009, EDIF1 produced stable and predictable cash yields of 5-7% and internal rates of return of 10-15% per year.
EDIF2 is likely to follow the strategy of EDIF1, which focused on mid-sized, mature, income-generating infrastructure assets in the utilities, transportation and essential services sectors.
Its assets are in the UK, Finland, Germany, Sweden, Denmark and Spain and include Anglian Water Group, the UK’s fourth-largest water and sewerage service provider; Electricity North West Limited (formerly United Utilities Electricity), the sixth-largest electricity distribution network in the UK; Reganosa, a Spanish liquefied natural gas regasification plant and gas transmission network; and Digita, the leading Finnish broadcast tower operator.
Clausen holds the view that the “sweet spot” for investment is definitely core infrastructure – transport and utility investment.
Since CFSGAM entered the infrastructure investment space in 1994, its core infrastructure returns have averaged 13.2% a year.