This pool isn’t the widely reported Patria PE fund (which closed earlier this month with $1.25 billion). Instead, this is the second infrastructure fund to come from Pátria Investimentos and Promon SA. The pool, P2 Brazil Private Infrastructure Fund II closed on Aug. 15 with $1.155 billion. This is up from the $1 billion target.
New York-based Forum Capital Partners was the placement agent. Investors of fund II include corporate and public pension funds, endowments, family offices, funds of funds, and sovereign wealth funds from the U.S., Canada, Europe, Asia and the Middle East, according to a statement.
Sao Paulo-based Patria, a Brazilian buyout shop, is partly owned by the Blackstone Group. Promon, also of Brazil, is an engineering and construction management consulting firm.
P2 won’t invest in public infrastructure projects like toll roads or highways. Instead, the fund will focus on transportation and logistics, oil and gas infrastructure, and water and waste management that mainly serves the corporate sector. “P2 will develop or upgrade infrastructure for the private sector in Brazil,” says Jeff Stern, Forum’s managing partner. This could include barges, warehouses or rail cars, he says.
Patria’s first infrastructure fund raised $323 million in October 2006, Stern says. The pool was structured as a holding company that controlled Energias Renováveis, or ERSA, an aggregator of small hydro power plants. ERSA merged earlier this year with CPFL, a Brazilian utility company. The fund has generated a multiple of 2.2x and an IRR of 28%, Stern says.
The 18-month fundraise for P2 actually began in mid-2009, Stern says. From the end of 2009 to the first quarter of 2010 the market wasn’t “that conducive to any fundraisings taking place,” Stern says. Infrastructure funds raised a total of $37.9 billion in 2009 and 2010, roughly the same amount raised by the industry in 2008 alone, according to Preqin. In the first half of 2011, infrastructure fundraising plunged 64.5% compared to the same time period in 2010, Preqin says.
Still, P2 completed a first close of $470 million (including GP commitments) in second quarter 2010. About 75% of the fund was raised in 2010 with the rest collected this year, he says. “I’m really happy to have gotten the amount raised and in the time period,” Stern says.
How is the current fundraising market? “It’s a really crowded market,” Stern says. “Getting time and attention from investors is the most challenging part of it.”
Funds that are getting raised are those pools with a “clear, differentiated investment strategy where GPs have a record of success,” Stern says.