L&G today has announced the first close of its L&G Digital Infrastructure Fund (“LDIF” or “the fund”), totalling c.EUR600 million in commitments and associated co-investments, with a second close expected later this year. The launch is a key milestone in L&G’s Asset Management strategy to expand its private markets proposition.
L&G writes that the LDIF exemplifies its ability to combine deep sector expertise and client relationships with the strength of its balance sheet to incubate solutions aligned to long-term macroeconomic trends. The fund enables L&G to capitalise on the USD2.5 trillion gap in funding needed by 2030 to meet accelerating demand for digital infrastructure. Targeting a gross IRR of 15 per cent, LDIF aims to invest in high-quality, productive and fast-growing businesses and assets that advance digital transformation, enhance connectivity and deliver long-term economic benefits. The fund invests primarily in Europe and the UK with a smaller, selective global allocation, expected to be focused mainly on the US.
Structured as an Article 8 Luxembourg-domiciled fund, LDIF has attracted a diverse mix of institutional capital. Investors include third-party commitments from local government pension schemes, specialist infrastructure funds and global asset managers, with L&G investing alongside clients via its balance sheet.
L&G writes that the LDIF builds on L&G’s infrastructure fundraising momentum following the final close earlier this year of the L&G NTR Clean Power (Europe) Fund, in partnership with leading renewable energy specialist NTR, which raised over EUR600 million to invest in renewable energy assets. “Together, these funds underline L&G’s ability to develop and scale institutional-grade strategies across digital transformation and energy transition – two of the most powerful long-term themes shaping global economies.”
Bill Hughes, Head of Private Markets, Asset Management, L&G, says: “Infrastructure is a key tenet of our expanding Private Markets platform and a global, generational investment opportunity. As early investors in digital infrastructure, we’ve built strategic partnerships and deployed capital into assets that are essential to economic resilience and long-term productivity. This first close adds to the strong momentum across our infrastructure offering, as we continue to back the businesses and assets that will drive the energy transition and digital economy, whilst seeking to deliver long-term value for investors.”
As an early mover in digital infrastructure, first investing in 2018, L&G writes that it has built an established team of specialists averaging 15 years’ experience. In 2019, it made a strategic investment in Kao Data, a leading UK-headquartered developer and operator of high-performance data centres, which has since expanded to seven facilities across four locations and continues to grow. Other significant investments include a GBP750 million hyperscale data centre development in Newham, London, expected to contribute GBP88 million to local gross value added (GVA), create over a thousand jobs during the construction and operational phases and has the potential to be a heat source for thousands of homes in the area.
The firm writes that to further build the team and meet growing demand for the fund, L&G has appointed Jack Colbourne as a non-executive director on LDIF’s investment committee. Jack was previously a Partner and Investment Committee Chair at c.EUR10 billion AUM European mid-market Arcus Infrastructure Partners. L&G has also hired Achal Arora as Managing Director – Digital Infrastructure Investments. He joins from Macquarie Asset Management, where he was Managing Director in the European digital infrastructure team.
Matteo Colombo, Head of Digital Infrastructure Investments, Asset Management, L&G, says: “The launch of our Digital Infrastructure Fund marks a significant next step in our commitment to invest in the infrastructure that underpins the digital economy. From AI and cloud-computing, to data sovereignty and connectivity, the demand for robust digital infrastructure is accelerating across Europe. We’re leveraging our deep sector expertise, further enhanced with the recruitment of Jack and Achal, and strategic partnerships to identify and scale investments that offer strong long-term value for investors while supporting innovation, inclusion and economic resilience.”
