GIP Closes Largest Infrastructure Fund With $8.25 Billion

Global Infrastructure Partners, the private-equity firm whose holdings include Gatwick Airport in the U.K., raised $8.25 billion for the largest fund dedicated to infrastructure buyouts.

GIP’s second fund attracted more than its initial target of $7.5 billion as investors expect cash-strapped governments to open the door to private acquisition of assets, Chairman Adebayo Ogunlesi said in an interview. The firm in 2008 raised $5.64 billion for its first fund, which owns stakes in the Australia’s Port of Brisbane and East India Petroleum Ltd.

“If you look around the world, governments are under tremendous fiscal pressure, so they really don’t have the capability to continue to invest,” Ogunlesi said. “Private-sector investment is going to have to fill some of that void.”

GIP, started by Credit Suisse Group AG and General Electric Co. in 2006, will use the new fund to invest primarily in operating businesses in developed markets, said Ogunlesi, who was head of investment banking at Credit Suisse First Boston, the securities unit of Zurich-based Credit Suisse at the time. The firm, which oversees $15 billion, has teams dedicated to investments and the portfolio’s operations and draws on a group of former executives as senior advisers. It focuses on the energy, transport and water and waste industries.

GIP surpassed Goldman Sachs Group Inc.’s $6.5 billion infrastructure pool as the industry’s largest, according to Preqin Ltd., a London-based research company. Globally, 142 funds dedicated to infrastructure were raising capital as of Oct. 1, targeting $91.6 billion, Preqin said.

’Defensive Investment’

“Everybody is looking at quantitative easing and the U.K. equivalent and extended periods of a lot of liquidity, the corollary of which is that people are afraid inflation may show up,” said Ogunlesi. “People look at having hard assets as a defensive investment, and they like that. That proved to be very attractive to investors this time around.”

GIP said last month it will acquire most of Chesapeake Energy Corp.’s pipeline and processing assets for $2.7 billion. In June, GIP agreed to buy Chesapeake’s share of a publicly traded pipeline partnership, now called Access Midstream Partners LP.

The firm, led by Ogunlesi and nine other partners, owns 42 percent of Gatwick after investing $314 million in 2009, according to GIP’s website. The firm also owns Scotland’s Edinburgh Airport, in which it invested $1.3 billion, and 75 percent of London City Airport, the website shows.

The new fund, which gathered about one-third of its capital from clients in the first pool, offered tiered levels of fee terms based on the amount an investor committed and whether they participated in the first fund, said Ogunlesi. GIP’s investors include sovereign-wealth funds, endowments and corporate and public pension funds, including those from Maine, Oregon and Washington.

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