Italy’s F2i secures €3.1bn as first fund merges with third

Italian infrastructure fund manager F2i has sealed a €3.1 billion first close on its third fund, seeding the new vehicle with assets from its maiden fund.

The group secured over €1.7 billion from the 11 main investors in its first vehicle, comprised of two Italian pension funds, five local banking foundations, Ardian, Intesa Sanpaolo and Cassa Depositi e Prestiti.

A further €1.4 billion has been committed by international investors including pension funds, sovereign wealth funds, asset managers and insurance companies, ahead of an expected close early next year on €3.3 billion. Canadian pension scheme PSP Investments and Singapore’s sovereign wealth fund are understood to have each invested €450 million, although F2i declined to comment.

The 12-year fund has merged the assets of F2i’s first fund, which closed on €1.8 billion in 2009 following its launch in 2007. These include holdings in gas distribution company 2i Rete Gas, a number of Italian airports, renewables group EF Solare Italia, water company Iren Acqua and toll road operator Infracis.

Both the first F2i fund and the second €1.2 billion vehicle – which is 75 percent invested – have so far only invested in Italy. Chief executive Renato Ravanelli indicated this could change in the latest offering.

“The goal was to raise new capital to continue the development, both in Italy and abroad, of the sizeable infrastructural holdings put together to date by F2i’s first fund, which had drawn on all of its commitments,” he said. “The response of investors has been extremely positive.”

The first fund has delivered a gross internal rate of return above 12 percent, F2i confirmed. The third fund will target a similar figure.

Infrastructure GPs with first-time vehicles coming to the end of their life cycles have increasingly been looking at exiting them wholesale, as opposed to doing piecemeal asset sales. Structures can involve rolling over existing assets into brand new vehicles – with a lower risk-return profile and a longer duration – which they then open up to new LPs through stake sales.

Various past examples include Dutch fund manager DIF’s sale in November 2014 of its maiden infrastructure fund DIF PPP to Aberdeen Asset Management.

F2i’s second fund has this year focused on consolidating the fragmented Italian telecoms market, acquiring Infracom, MC-link and KPNQwest Italia alongside the Marguerite Fund. It has also boosted its presence in the Italian wind and biomass industries.