AMP Capital hits $4bn hard-cap on fourth infra debt fund

The Sydney-based fund manager said it believed its Infrastructure Debt Fund IV was the largest-ever fundraise for an infra mezzanine debt strategy.

AMP Capital has raised its largest-ever closed-ended vehicle after reaching a final close on the Infrastructure Debt Fund IV on its hard-cap of $4 billion.

The fundraise surpassed the vehicle’s target of $3.5 billion and saw AMP Capital secure an additional $1 billion in co-investment rights and another $1.2 billion from investors in separately managed accounts. This brings the total deployable capital for the firm’s fourth infrastructure debt strategy to $6.2 billion.

AMP Capital said it believed this was the largest fundraise in the world for an infrastructure mezzanine debt strategy.

Andrew Jones, global head of infrastructure debt at AMP Capital, told Infrastructure Investor the fundraise was “a good advertisement for the attractiveness of the infrastructure debt sector” among global investors.

“On the investor side, demand continues to grow, because the consistency of the strategy continues to be attractive,” he said.

“We’ve had some feedback that returns in the core infrastructure equity space continue to compress, and in the senior debt space margins have continued to grind lower. At the same time, we’ve been able to maintain the returns that we’ve achieved historically, so on a relative basis [our mezzanine debt strategy] starts to look more and more attractive.”

Commitments to IDF IV came from 86 investors in 14 countries. The largest pool of capital came from South Korea, where investors contributed roughly $1.2 billion.

Significant sums were also raised from Japan, Canada, Germany and the UK, with insurance companies, pensions and sovereign wealth funds making up the bulk of investors. “Our strategy is most attractive to people who value attractive yield with capital stability, and those three types of investors are firmly in that box,” Jones said.

He added that there were some Australian investors in the fund, but that Australia was “one of the smaller regions” for the strategy in terms of pools of capital.

IDF IV, a 10-year vehicle targeting gross IRR of 10 percent, has already deployed $2 billion into 10 assets around the world, including a district heating business in Europe and a data centre in the US, which the fund manager declined to name through a spokeswoman. Jones said it would continue to target assets in the energy, digital and transport sectors.

The amount raised surpasses the total raised by IDF III, which closed on its $2.5 billion hard-cap in August 2017 and also garnered significant co-investment commitments to bring its total deployable capital to $4.1 billion. Korean and Japanese investors were the largest sources of capital in that vehicle, which reached full deployment earlier this year.

AMP Capital’s first infrastructure debt fund raised $400 million following its launch in 2010. Its second fund, launched in 2013, raised $1.1 billion.