The Eurazeo Transition Infrastructure Fund (ETIF) – launched with a target of €525 million – has had a final close on €663 million, with another €43 million in co-investments. The strategy is the first equity infrastructure fund from the Paris-based outfit and focuses on transitioning essential infrastructure services.
Overall, Euronext-listed Eurazeo has €35 billion in diversified assets under management across asset classes. But being under the Eurazeo umbrella has not impacted the fundraising in the way that one might perhaps expect. “Over 60 percent of ETIF’s LPs are new LPs to Eurazeo,” says Laurent Chatelin, partner in Eurazeo’s infrastructure division.
The Article 9 fund under the EU’s Sustainable Finance Disclosure Regulation was launched in April 2022 and received a cornerstone commitment of €75 million from the European Investment Fund at first closing in November 2022. The fund also has an outsized €100 million GP commitment.
The manager’s infrastructure programme has seen further support from institutional investors, including family offices, banks, pension funds, funds of funds and a large US consultant.
“What’s interesting is that we have some LPs that came back from [mega-funds] to the mid-market space, preferring to be more meaningful in our fund rather than being €10 million in a $24 billion fund. So a number of our LPs did not re-up in the mega-funds,” says Chatelin.
Overall, French investors make up 25 percent of the capital, with the rest of Europe – and Morocco – providing 50 percent, the US 10 percent, and Eurazeo the remainder.
Chatelin confirms that Eurazeo is now committed to infrastructure. “First, it’s a strategy that can scale. We have 23 institutional investors in the fund, so we have an average ticket of €30 million, which is above the Eurazeo average in other strategies. Second, it’s really at the heart of the group strategy, which is mid-market, growth and impact. Out of the six portfolio companies we’ve invested in, five are growth platforms.”
The five growth platforms are Ikaros Solar, a Belgian rooftop solar developer; Electra, a pan-European fast EV-charging operator; the regional edge data centre provider Etix Everywhere; agrivoltaic energy group TSE; and 2BSI, which is a diversified waste management company. The sixth portfolio company is the Danish plastic waste sorting plant Resource – a joint venture with Quantafuel.
Eurazeo mostly holds majority positions and has control or co-control over every portfolio company.
Looking ahead
“We’ve already committed around 60 percent of the fund, meaning that it’s not going to be long before we’re back on the fundraising trail for a second vintage,” says Chatelin, who sees plenty of opportunities in the lower mid-market space of €50 million to €100 million, particularly in bilateral situations.
The core-plus/value-add strategy makes demands of the potential targets and may provide opportunities for co-investment-seeking LPs along the way. “We’re looking at growth companies that require follow-on capital,” says Chatelin, who envisions ad-hoc co-investment opportunities for the growing portfolio other than what has already been raised.
So far, OECD Europe has been the preferred hunting ground and is likely to remain so. “There are a lot of opportunities. We’ve only just scratched the surface,” says Chatelin.
The 10-year fund was launched in 2022 just as markets began to freeze and the initial expectations of a final close 12 months after the November 2022 first close were – unsurprisingly in hindsight – not met. “I guess today the market is more looking at 24 months within first close. Things take time,” says Chatelin.
When asked what held investors back, he says: “In 75 percent of the cases, [because it was a] first-time fund. Then, I guess, it was a question of timing because they may not have had capital [available] during the fundraise.”
Eurazeo first dipped its toes into infrastructure in 2021 with a sustainable maritime-focused debt fund succeeded by the Eurazeo Maritime Transition Fund launched in 2023 and still in market. However, these funds were developed on the back of Eurazeo’s general private debt franchise.
Chatelin joined Eurazeo from Marguerite in January 2021 alongside Martin Sichelkow and Melissa Cohen to establish Eurazeo Infrastructure Partners.
“Since we arrived, we have effectively gone for the core infra – core in the sense of equity, governance, downside protection, platforms, transition to low carbon. That really speaks to infra investors alongside the strong sustainability framework that the group has developed and which we tailored for infra” he says. Indeed, some commitments to the Transition Fund come from dedicated climate and/or impact-focused pools of capital.
Chatelin is not opposed to more specialist funds under the Eurazeo infrastructure umbrella: “As we’re doing more of the edge of the infrastructure [asset class], you never know what’s going to develop and at what pace… The way we see ourselves growing is by effectively growing the size of the flagship, but potentially also developing sizeable but more focused funds.”