Manulife Closes $2B Infrastructure Fund
The offering was oversubscribed by institutional investors from around the world.
TORONTO–Manulife has closed on approximately US$2 billion in capital commitments to the John Hancock Infrastructure Fund, which allows investors to invest via Manulife’s General Account in direct private equity investments and co-investments in the infrastructure sector in the US.
The fund’s offering was oversubscribed, according to Kevin Adolphe, president and CEO of Manulife Asset Management Private Markets.
Forty-five percent of the institutional investors participating in the fund are from North America, 40% from Europe and 15% from Asia. Nearly half of the capital commitments was raised from pension funds and insurance companies, and the remaining commitments primarily from global asset managers with select sovereign wealth funds.
John Anderson, Manulife’s head of Corporate Finance, and Recep Kendircioglu, senior managing director, Power and Infrastructure are leading the fund.
The fund was partially seeded by the company and it has agreed to maintain a 40% ownership of certain of the assets and 50% ownership of the balance of the assets. In addition, the company will match the fund’s new primary investments on a dollar-for-dollar basis.
According to Kendircioglu investments will be focused on regulated utilities (electricity transmission and distribution, gas distribution, water and wastewater); contracted energy assets (wind, solar, hydro, natural-gas fired, pipelines and storage); transportation (toll roads, bridges, tunnels, parking facilities, ports, airports, and rail), telecommunications and other infrastructure assets.
Investors Target Infrastructure
This fund joins a growing number of equity pools targeting the infrastructure space. Blackstone, for example, is reportedly near its first close of a $5 billion infrastructure fund.
Separately sovereign wealth funds have been eager to invest in these assets as well, according to a Preqin blog post by Ibrahim Yildiz. He writes that the majority (64%) of SWFs target infrastructure projects and almost two-thirds (63%) of SWFs access the asset class through unlisted funds. Yildiz points to Saudi Arabia’s Public Investment Fund, which is an anchor investor in Blackstone’s fund, as an example of a SWF investing through an unlisted fund in infrastructure.
“Infrastructure remains an important component in the portfolios of many SWFs due to the attraction of strong risk-adjusted returns and inflation-hedging characteristics on offer,” he writes.
However, the asset class is not immune to the competitive forces affecting much of commercial real estate — Yildiz warns that increasing competition for assets and the resulting effect of rising asset prices are likely to eat into eventual net returns.