Madrid-headquartered manager Altamar Capital Partners has closed its second infrastructure fund of funds on €430 million, having originally targeted €350 million.
Altamar Infrastructure Income II, which has a focus on core-plus infrastructure, aims to deploy about 60 percent of its proceeds in primary funds, with the remainder to be plugged into secondaries and co-investments. It is already about 50 percent deployed, Ignacio Antoñanzas, founding partner of Altamar Infraestructuras, told affiliate title Infrastructure Investor.
Altamar would be focusing beyond some of the more high-profile funds, Antoñanzas said. He declined to disclose the funds it had invested in.
The group raised the majority of commitments from Spanish and other European LPs, although several higher-ticket commitments were also received from investors in Latin America.
According to Antoñanzas, added that about 60 percent of the fund’s LPs were institutional investors and the remainder family offices and private banking clients, with that ratio the other way round for the predecessor fund, which raised €356 million after its launch in 2016.
“We don’t just choose the best in the market because that is not diversification,” he said. “We have told our investors we want a 10-12 gross and then based on that objective, we decide on the selection of GPs and co-investments.”
Infrastructure secondaries could benefit from a boost in buyside participants this year, with firms including Macquarie Infrastructure and Real Assets and Brookfield Asset Management preparing to launch investment units, as Secondaries Investor has repored.
Antoñanzas is keen for the fund to be exposed to digital, social infrastructure and renewables assets and wants Altamar to avoid country or sector-specific funds in its primary investments. He also sounded a note of caution on renewables investments.
“I think there is too much renewables and sooner or later, something might go wrong. Not with the sector itself, but people try to extract too much value from an asset that is becoming a commodity,” he argued.
No game playing
Antoñanzas added that managing a fund of funds vehicle can provide a broad and unique perspective on the wider market. When asked to highlight some of the lessons he has learnt from this, he described trends accelerated in the digital and clean energy sectors and warned against leverage creep, although also cautioned those managers he sees “playing games”.
“The most important lesson is you have to really stick to what infra is,” he argued. “When you start playing games with the asset, you forget the beauty of infra. If you buy a utility or electricity generation asset and you start playing games on the merchant side, you could earn a wonderful return, but the reality is you are playing games. If you are playing games, it is not infra.”
As more investors continue to enter the asset class, Antoñanzas said the fund of funds approach can help bed them in, while providing an additional layer of protection already provided by infrastructure.
“It’s great for newcomers who don’t really understand the asset class and want to have a diversified approach,” he maintained. “You will not have a 3x multiple, that’s for sure, but you will never have something below 1.5x.”