Morgan Stanley raises $5.5 billion for third infrastructure fund

New York: Morgan Stanley Infrastructure Partners raised $5.5 billion for its latest fund, exceeding an original target of $4 billion after a flood of investor demand, chief investment officer Markus Hottenrott said in an interview.

After kicking off fund-raising late last year, the vehicle, known as North Haven Infrastructure Partners III, ended up lifting its so-called hard cap — or upper limit — from $5.25 billion, Hottenrott said.

“The flip side of a hot fund-raising market is that there’s significant demand for infrastructure assets,” which can push up valuations of targets, said Hottenrott. He said his team is committed to seeking out bets and is capable of finding them in non-competitive, off-market situations, and putting capital to work at a moderate and disciplined pace.

The fund, like its predecessors, will be diversified across geographies, investing about half its capital in the Americas, 40 per cent in Europe and roughly 10 per cent in the Asia Pacific, with some flexibility, Hottenrott said. Already, the fund has agreed to transactions involving German wind energy project developer PNE AG and Altice Europe NV’s Portuguese fibre assets.

The New York State Common Retirement Fund, Texas Retirement System of Texas and Taiwan Life Insurance Co. are among the fund’s investors, according to data compiled by Bloomberg.

Investment management head Dan Simkowitz is looking to extend his division’s growth after it boosted annualised revenues some 50 per cent to roughly $3 billion since 2016. The bank manages about $100 billion in alternatives on behalf of clients, he told an investor conference last month. About half of that figure is in real assets, a category that typically includes real estate and infrastructure.

There’s a “huge opportunity” to meet client objectives by developing existing strategies, such as infrastructure, and creating new products, Simkowitz said in an interview. Those include offerings such as the firm’s Tactical Value platform focused on illiquid, long-term, private investments across credit and equity.