Wednesday, November 13, 2024

The Pipeline: Brookfield mulls AI infra fund, CIP preps grid strategy, Stonepeak $3.1bn high-flier

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First look

Great strides: Brookfield on the way with new product (Source: Getty)

Brookfield contemplates AI infrastructure fund

Brookfield Asset Management is pondering the launch of a dedicated investment strategy focused solely on AI infrastructure.

BAM president Connor Teskey said the topic was “near the top of our list, I would say, as we begin to think of new products and product development initiatives at scale”, on the firm’s Q3 2024 earnings call.

“It would absolutely be something more aligned with an infrastructure product in our minds,” he added. Teskey did not indicate a timeline for such a product other than “we’ve made great strides and we’re getting closer”.

Regarding “muted” fundraising – as one analyst said – for the Brookfield Global Transition Fund II, Teskey made the case that the apparent stall was in fact a “high class problem”, stressing his confidence in hitting the fund’s $17 billion target, albeit in early 2025.

In his view, the delay did not stem from a lack of appetite for transition fundraising.

Rather, Brookfield’s menu had too many good options. The Catalytic Transition Fund, launched November 2023 with a $5 billion target already had $2.4 billion at its first close in September.

Hopefully, that future AI fund will not be involved in any high-class problems.

DigitalBridge Partners III eyes H1 2025 close

Also looking to 2025 is DigitalBridge CEO Marc Ganzi, after raising $4.2 billion in Q3 from co-investment capital, flagship, core and credit funds.

The DigitalBridge Partners III fund added a further $400 million after reaching the half-way mark of its $8 billion target during H1.

“We’re performing quite well on flagship,” Ganzi told analysts on the firm’s earnings call.

“We literally have commitments coming in every day. Last night we had some commitments come in,” said Ganzi, noting that the $8 billion target was not a hard-cap, and that the existing momentum could potentially carry the total past that number, albeit in Q1 2025.

On the bright side, Ganzi said that education efforts had led to an LP base willing to dedicate “more capacity to owning the picks and shovels of AI” by building out the underlying digital infrastructure.

Perhaps modern mining equipment could speed up the fundraising.

CIP plans grid strategy launch

Copenhagen Infrastructure Partners is currently marketing a new strategy based on investments in the electrical grid, The Pipeline understands.

Scheduled for launch in late H1 2025, the new fund will invest in regulated distribution grids that are about to be built or are near completion. This is a slight detour from CIP’s otherwise mostly greenfield investments and takes advantage of DSOs being systemically capital constrained.

Some investment may be in the US, but this is not necessarily the only place of interest, according to the source.

DSOs generally are looking to update old grids and prepare new grids for the expected rise in demand for electricity associated with the overall move to electrify mobility, heating, data centres and industry.

CIP declined to comment on the strategy.

Eiffel eyes €1bn for second biogas fund

Eiffel Investment Group is about to launch the successor of its Eiffel Gaz Vert fund. The first closed in July 2020 on €210 million. The second fund has a target of €1 billion, which will be a sizeable step up, but  “reflects the larger opportunity”, managing director Pierre-Antoine Machelon informs The Pipeline.

Like the first fund, the successor will invest in biomethane and some of this investment will be in Poland where Eiffel already has a platform dedicated to this technology.

“Across strategies, we’ve invested €500 million in Poland so far,” says Machelon. “Poland needs decarbonisation and there is a political consensus about it. It also has the highest growth in Europe and has a risk premium, despite the power prices being increasingly contracted in euros,” he adds.

The new fund is the second Eiffel strategy to aim for €1 billion this year, following the launch of the third debt flagship in April.

Eiffel’s other equity strategy, the Eiffel Transition Infrastructure Fund launched in 2022, is still in market, having already been allocated nearly €300 million, most of which is already deployed across 10 transactions. Close is expected in the middle of 2025.

Essentials

Final week to submit for our 2024 annual awards!

It’s global awards time! But this year, we’ve made some significant changes to Infrastructure Investor’s annual awards.

What’s changed? We have decided to discontinue our long-standing voting system. The winners in each category will now be decided by the same judging panel of Infrastructure Investor editors who previously focused on producing the shortlists, augmented by senior editorial staff from other asset classes. You can read all about the rationale behind that decision HERE.

What hasn’t changed? We still want your submissions, which you can send to us by clicking HERE. You have until Midnight (PT), 15 November to submit and, as usual, we’ve put together some handy guidelines, which you can download HERE.

Don’t miss your chance to share your successes with us!

Grapevine

“It doesn’t depend so much on how expensive the energy is going to be. It’s always going to be cheaper to run on a train. It’s a little bit like investing in shale gas. You’re indexed on the energy price. So, if you can’t invest in shale gas for whatever reason, and you want to be indexed to that, you can invest in railway instead.”

Laurent Fourtune, CEO of Kevin Speed, the first railway company allowed to share the existing high-speed tracks of SNCF Réseau, talks about the challenge of infra-like assets at Paris Infra Week

LP watch

‘Outside the box’ co-investments

Infrastructure Investor brought you the latest on the relentless rise of co-investments for our November cover story and US-based LP New Jersey Division of Investment has come up with a unique agreement to keep its thirst quenched.

The investor had allocated $300 million of co-investment capital to Brookfield Global Transition Fund I in November 2021 when committing to the fund. However, only $100 million of this has been used, including in the Westinghouse acquisition, with the investment period now concluded for the fund. It had also allocated money for the ill-fated Origin Energy deal.

Shoaib Khan, New Jersey’s director and chief investment officer, told the LP’s meeting at the end of last month that it had negotiated an agreement with Brookfield to shift the co-investment allocation into Global Transition Fund II, despite having not yet committed to the fund. Khan hailed “excellent work on the team’s part for thinking outside the box”, as well as Brookfield’s “partnership spirit”.

In fact, The Pipeline understands that the remaining $200 million can be used across any of Brookfield’s existing infrastructure funds, beyond just the transition series.

Partnership spirit, indeed.

Deals

High-flying: Stonepeak moves into aircraft leasing with $3.1bn deal (Source: Getty)

Stonepeak lands $3.1bn aircraft leasing take-private

Stonepeak has signed an agreement to buy Air Transport Services Group, a publicly traded US aircraft leasing company, for an enterprise value of $3.1 billion.

The investment will come from Stonepeak Infrastructure Fund IV, which in 2022 reached final close on $14 billion. Stonepeak is currently in market with Stonepeak Infrastructure Fund V, seeking $15 billion and has raised $3.1 billion to date, according to Infrastructure Investor data.

Stonepeak agreed to pay $22.50 per share in cash, at a premium of 29.3 percent over the closing price on 1 November.

The NASDAQ-listed company has “deep relationships with some of the world’s largest e-commerce companies” and plays a “fundamental role in enabling the growth of e-commerce globally in a world that continues to shift away from brick-and-mortar shopping,” said Stonepeak’s senior managing director James Wyper.

While expected to close in H1 2025, the agreement includes a go-shop period ending on 23 December during which ATSG may entertain other bids.


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