First State Investments has raised €700m for its second European infrastructure fund.
The European Diversified Infrastructure Fund II, which is hoping to eventually raise €2bn, was backed by global institutional investors.
Around two thirds of investors in the previous fund have joined.
First State said Fund II will follow a core and core-plus strategy in Europe’s utility, energy and transportation sectors.
Philippe Taillardat, partner, infrastructure investments at First State Investments, said: “The past 18 months have witnessed the emergence of direct investors who dominate the limited number of large, very competitive infrastructure investments as well as the first few mega-funds within the infrastructure space.
“This has reinforced our conviction that a buy-and-hold strategy focused on the European mid-market is relevant as we see less competition and more rational pricing.”
Around one third of the fund’s capital has so far been invested, with assets bought in France and in Portugal.
The acquisition of Ancora Wind in Portgual was funded through long-term bank debt and an equity capital increase at Finerge, a company owned by First State that owns and operates 27 wind farms.
In France, the fund has invested in Coriance, a heating network operator with 31 district heating and cooling networks.