You hear a lot about the plight of first-time funds. Last year, for example, a record $80.39 billion was raised for unlisted infrastructure by 53 funds, compared with $68.31 billion raised by 79 vehicles in 2017. So although it is obvious that the market is growing rapidly, it is consolidating just as quickly.
Yet this does not appear to have affected Asterion Industrial Partners, the new outfit established by Jesús Olmos, the former co-head of global infrastructure at KKR. In late March, six months after the company officially started life and five months after it registered its pan-European Asterion Industrial Infra Fund I in Spain, the vehicle reached a €519 million first close. It hopes to hit its €850 million target by mid-2019.
Last November, Asterion had already secured a €300 million commitment from four cornerstone investors before having a deal signed. That tells you two things: that it should have little trouble hitting its €1 billion hard-cap; and that its LPs – which include sovereign wealth funds, pensions and asset managers from Europe, North America and the Middle East – have faith in its abilities.
“We might be a first-time fund, but we are not a first-time team,” says Olmos. He is right, in the sense that his two other partners – Winnie Wutte and Guido Mitrani (who, at the time of writing, was still to join) – worked alongside him at KKR for more than a decade. However, Olmos also points out that across his 15-strong team, “almost everyone has a link to the three of us”.
“One of the ways in which we tried to give comfort to investors was to show them that, practically six months since we started, we have a full team of 15 people, a Madrid headquarters plus a presence in Paris and London and a chief financial officer in place. When we had investors doing due diligence on site, they were sort of amazed that we had started yesterday but had all the requisite infrastructure and a team of 15.”
Olmos believes the background of the team, which includes former senior figures from Allianz, Telefónica and Endesa France, is one of the main reasons Asterion has been able to gain such traction. “Our differentiator is in the name of the firm: we have a lot of industrial experience. The market is very competitive. That creates a need to develop business plans that are able to produce the returns investors are looking for. Being industrial is also how you can create proprietary business plans and know what to do with the asset: [how to] grow it and so on.”
Wutte says this industrial experience made the cornerstone investors comfortable about committing their capital to Asterion before a deal had been struck. She also stresses the partnership model Asterion is pursuing with its investors, and points to the €120 million of co-investment generated for its first deal as an illustration of this: “It was a proof point for us.”
That first deal saw the firm invest an undisclosed amount to acquire a co-controlling stake in France’s Proxiserve – a provider of energy services, including sub-metering, maintenance, heating and electricity – alongside Paris-based fund manager Mirova.
In addition to energy and utilities projects, Asterion plans to invest in telecoms and mobility assets in France, Italy, Portugal, Spain and the UK. It will also look selectively at other parts of Europe. The pan-European Asterion Industrial Infra Fund I has a 10-year lifespan with two possible extensions. It aims to generate gross returns of 12-14 percent and an average yield of 5 percent.
So, what’s next for Asterion? “We want to become leaders in the European mid-market,” says Olmos. “We think this small- to mid-market space is very solitary. We also want to be able to develop a good network of investors with which we can broach deals together. We don’t just want to grow for the sake of growing.”