Pacific Equity Partners has locked in cornerstone investors for its upcoming infrastructure fund that it will formally launch around the middle of the year, Inframation understands.
The Sydney-based private equity outfit is targeting to raise AUD 750m (USD 600m), and expects to hit first close around the time of the launch, said a source involved in the process.
The closed-ended Secure Assets Fund will chase deals that offer internal rates of return in the mid-teens, added the source.
It will target infrastructure-like businesses that deliver lower returns than typical private equity-style investments – which return above 20% – but higher returns than on core assets.
The fund is expected to invest in transport, logistics, power and gas generation, and network businesses backed by physical assets that deliver stable long-term cash flows.
Paul Foster, the former head of AMP Capital’s infrastructure business, joined PEP last year to lead the new investment strategy.
Existing LPs are said to be backing the fund, and are likely to be joined by incoming investors from Asia, Europe and the US.
PEP has managed five general buyout funds in Australia with mandates to invest across a broad array of sectors since it began investing in 1998. Previous funds are understood to have bid on high profile infrastructure deals in recent years including IFM Investors’ sale of Pacific Hydro and Qube Holdings’ buyout of Asciano’s ports business. It owned Energy Developments for five years, growing its gas generation portfolio by a third to 900MW.
A PEP spokesperson declined to comment.