Stonepeak’s third infrastructure fund could hit $7 bln

  • Oregon backs new fund for up to $400 mln
  • Fund III offering carried interest discount to first close LPs
  • Fund II closed on $3.5 bln last year

Stonepeak Infrastructure Partners’ latest fund could reach as much as $7 billion, documents released by Oregon Investment Council show.

Buyouts and other outlets previously reported the firm set a $5 billion target for Stonepeak Infrastructure Fund III, which would make the vehicle roughly 40 percent larger than Stonepeak’s previous fund. Stonepeak closed Fund II on $3.5 billion last year.

In an investment memo, Oregon staff noted that the firm’s larger fund size could merit concerns about a shift in its strategy. A separate report from Hamilton Lane, released by Teachers Retirement System of Louisiana earlier this month noted that the firm may pursue larger deals with the new vehicle.

Oregon staff said, however, that those concerns were mitigated by fund constraints on the size and type of deal it can pursue. Stonepeak has expanded its operations and investment relations team, which should help the firm handle a larger fund, according to the memo.

Fund III will invest in U.S. and Canadian infrastructure assets, typically allocating between $100 million and $1 billion of equity per deal, according to the memo. The firm expects to deploy the fund over a three- to four-year period.

Oregon approved a $400 million commitment to Stonepeak at its meeting on Sept. 20. The commitment remains subject to final negotiations of terms and conditions.

Oregon and other LPs have further incentive to finalize their commitments to Fund III soon, as the firm will share a smaller slice of the vehicle’s profits from investors who participate in the first close, according to Oregon documents.

In an investment memo, Oregon staff described the fund as having a “standard carry and preferred return.” The fund’s general partners will also commit an amount equal to at least 1 percent of the fund’s aggregate commitments.

Stonepeak was launched by Michael Dorrell and Trent Vichie in 2011. The pair previously led Blackstone Group’s infrastructure team.

The firm could not be reached for comment.

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