Actis, the private equity group specialising in emerging markets, announced on Tuesday that it has raised $750m (£471m) for a new infrastructure fund to invest in power and transport assets in Africa, Asia and Latin America.
The fund is 40 per cent smaller than its initial target of $1.25bn, underlining how investors are pulling back from new infrastructure funds after suffering heavy losses in the asset class during the credit crunch.
Paul Fletcher, senior managing partner at Actis, said: “We are not disappointed at all. This is the world’s most difficult fundraising market for private equity and investors have taken a lot of pain recently.”
The new fund cements Actis’s place as one of the world’s biggest private equity groups focused exclusively on emerging markets. It spun out four years ago from the UK’s state-owned CDC group, its biggest investor, which backed the new fund.
Several other private equity groups have moved into infrastructure recently, seeking to profit from an increasing push by governments around the world to lift spending on big power, transport and utility projects to fuel an economic recovery.
KKR of the US is raising an infrastructure fund, as is CVC of the UK, and 3i raised a listed infrastructure vehicle two years ago as well as a fund targeting infrastructure assets in India.
The credit squeeze has made it tougher to raise the large amounts of debt that are an important part of most infrastructure deals. But because infrastructure assets, such as toll roads and water-treatment plants, tend to have more stable long-term cash flows, they are more attractive when the economy is slowing.
Mr Fletcher said Actis had generated 23 per cent annual returns on its first $800m infrastructure fund, in which CDC was the sole investor.
“There is bank debt still available and deals will get done, but as a result of the crisis, prices have come down,” he said. “Big corporates with strained balance sheets could look to sell out of emerging markets to raise cash.”
The new fund has already invested in three deals, two of which it bought from the first Actis infrastructure fund: Globeleq, which owns power stations in Tanzania, and Umeme, a Ugandan electricity company that was privatised in 2004.
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