James Chern, Managing Partner & Chief Investment Officer, Seraya Partners
Singapore-based private equity shop Seraya Partners has raised $800 million for its inaugural pan-Asia infrastructure fund with backing from Canada’s Alberta Investment Management Company (AIMCo) and American investment giant BlackRock.
Seraya Partners on Tuesday announced the final closing of Seraya Partners Fund I which aims to invest in next generation infrastructure with a focus on renewable energy and online connectivity systems such as data centres, across developed markets in Asia Pacific.
Kicked off in 2021 the fund was expanded beyond its $750-million target thanks to demand from partners which also included the mainland China-backed Asian Infrastructure Investment Bank (AIIB).
“Asia’s rapidly expanding cities, intensifying climate change, and ageing infrastructure have created a pressing need to address the region’s burgeoning trillion-dollar infrastructure gap,” said James Chern, managing partner and chief investment officer at the fund manager. “Energy transition and digital infrastructure will be the twin engines to bridge this gap and lead us toward net-zero ambitions.”
Bridging the Infrastructure Gap
Aside from the three named backers, Seraya Partners Fund I, which aims to help plug Asia Pacific’s $1.7 trillion annual infrastructure investment gap, also garnered commitments from sovereign wealth funds, pension funds, insurers and family offices from North America, Europe and APAC, which the firm declined to identify.
Jason Munsch, managing director, infrastructure, and head of external partnerships at AIMCo
Seraya Partners said the fund targets mid-market opportunities with an average check size of $100 million to support wider adoption of clean, sustainable energy in APAC and help fast-track the region’s transition to net zero emissions.
To date, half of the commitments have been deployed to three platforms including Seraya Partners’ first venture, Empyrion DC, which develops and operates green data centres in Asia.
Since its establishment in October 2021, the operator has established a presence in Singapore and South Korea, with plans of building 10 to 12 facilities with a combined capacity of 300 megawatts portfolio within the next four to five years, Empyrion chief executive Mark Fong told Mingtiandi in a September interview.
Chern said the firm continues to see attractive opportunities in the data centre space and that the company is keen on boosting its data centre venture into new markets including Tokyo, Busan and Taipei.
“We also see growing demand from high-growth Southeast Asia markets with large youthful populations and growing mobile usage such as Jakarta and Singapore. This is all part of our overall focus on identifying supply-demand mismatch in the infrastructure space and to support a more sustainable future as the first green data centre operator in Asia,” the former Morgan Stanley executive told Mingtiandi on Tuesday.
Seraya Partners, which currently has $1 billion in assets under management, said it will continue to build its three existing platforms while identifying new investment opportunities for the fund to “drive attractive returns in the mid to high teens.”
The second portfolio company launched under Seraya Partners Fund I was Astrid Renew, an electric vehicle charging network venture established in May of last year with a goal of providing green power and energy storage solutions in Japan, South Korea, Singapore and select markets in Southeast Asia.
Later in 2022 Seraya Partners followed up by establishing Asian offshore wind farm vessel operator Cyan Renewables which aims to grow its portfolio to $1 billion by 2025.
Greening the Future
Backing the fund gives Alberta-based AIMCo exposure to a wide range of infrastructure investments in Asia Pacific after the pension fund manager opened its Singapore office in September, according to Jason Munsch, managing director, infrastructure, and head of external partnerships at the pension fund.
“This funding commitment is a strong recognition of the growing opportunities for AIMCo’s clients that lie in Asia. It is our strategy to seek to benefit from our partners’ deep regional and sector expertise as we continue to build out capabilities in the region,” Munsch said in a separate statement on Tuesday.
Dong-ik Lee, director general of AIIB’s banking department said the investment aligns with the China-backed multilateral bank’s goal of financing Asian infrastructure sector and would help reduce “bottlenecks in the infrastructure supply chain through innovative technologies such as offshore wind farm vessels.”
Asia’s infrastructure sector needs around $1.7 trillion in fresh investments each year through 2030 to support economic growth, reduce poverty and respond to climate change, according to estimates from the Asian Development Bank, cited by Seraya Partners.
Despite a challenging business environment, there has been a surge of capital flowing into the infrastructure sector globally.
Early last month, Brookfield Asset Management raised a record $6 billion in capital commitments for the final close of its Brookfield Infrastructure Debt Fund III with APAC investors contributing $1.5 billion of that total.
Brookfield plans to allocate 10 to 20 percent of the fund’s capital to the region’s transport, renewable power, data centre, utility and energy transit sectors.
German investment firm Patrizia and Japanese conglomerate Mitsui & Co are also targeting to raise as much as $1 billion for their APAC sustainable infrastructure fund after reaching a $110-million first closing in January.
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