On Tuesday, Global Infrastructure Partners (GIP), one of the world’s largest infrastructure investors with $69 billion in managed client assets invested in energy, water, waste and transportation infrastructure in OECD and Emerging Market countries, announced that it has completed fundraising for two infrastructure credit funds. The two funds, GIP Capital Solutions Fund II and GIP Spectrum Fund, drew aggregate committed capital of $2.8 billion.
Each of the funds closed on aggregate Limited Partner commitments of $1.4 billion. According to Global Infrastructure Partners, the Funds’ diversified investor base includes public and private pension plans, sovereign wealth funds, insurance companies, financial institutions, asset managers, endowments and high net worth individuals located across North America, Europe, Asia and the Middle East.
The funds garnered significant support from GIP’s existing investor base, while also attracting new investors with “a specific interest in infrastructure credit.”
GIP CAPS II makes debt and non-common equity investments in midstream energy, power, renewables and transport assets primarily in OECD countries, while GIP Spectrum focuses on lower risk profile, debt only investments in the same sectors and geographies. Both Funds specialize in custom-tailored investments that address situation-specific challenges and risks while providing financing solutions that help issuers achieve their objectives.
GIP Credit has already closed or announced four investments: a $110 million secured holding company term loan investment in Puerto Antioquia, a greenfield multipurpose port terminal in Colombia; the purchase of $325 million of an aggregate of $400 million senior secured notes issued by Whistler Pipeline, a greenfield natural gas pipeline that will connect the Permian Basin to the Agua Dulce hub near Corpus Christi, Texas; a $67.5 million participation in a second lien term loan investment in Grupo Via Central S.A. which was established to design, construct, rehabilitate and maintain a 273 kilometer freight railroad connecting central Uruguay to the capital port city of Montevideo; and a $325 million secured term loan to Saavi Energia, the fourth largest independent power producer in Mexico.
“We are extremely gratified by the confidence that our investors in GIP Credit have placed in us,” said Jennifer Powers, GIP Partner and Chair of GIP Credit. “In a market environment characterized by low interest rates, we believe our ability to provide customized financing solutions to issuers will give each fund a distinct and unique competitive angle. This will enable us to generate attractive risk-adjusted returns for our investors, with a focus on enhanced downside protection and capital preservation.”
GIP Chairman and Managing Partner Adebayo Ogunlesi added, “GIP Credit is an integral part of GIP and we are excited by this successful fundraising. We believe the GIP Credit team’s in-depth sector knowledge and lending expertise, combined with their ability to leverage GIP’s best-in-class infrastructure investing platform, will allow both funds to deliver on their investment objectives.”
Interest in GIP’s private infrastructure credit funds speaks to the stickiness of investor demand for infrastructure debt. In its 2021 infrastructure outlook released earlier this week, analysts at UBS Real Estate and Private Markets noted that private infrastructure valuations have “held up well and showed more downside resilience versus real estate and private equity so far in this [covid-19] crisis.” They pointed to a recent study from Moody’s that found fewer coronavirus-driven infrastructure downgrades and defaults between March and May of this year, as compared to non-financial corporates.
