InstarAGF says demand robust for C$750 million infrastructure fund

Tue Sep 29, 2015 4:00pm EDT
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By John Tilak and Euan Rocha

TORONTO (Reuters) - Canada's InstarAGF is seeing stronger-than-expected demand from institutional investors for its flagship infrastructure fund and is confident it will close the first round of fundraising by year end, its top executive said on Tuesday.

Toronto-based InstarAGF, an asset management joint venture between Instar Group Inc and AGF Management Ltd (AGFb.TO: Quote), plans to raise about C$400 million ($298.02 million) to C$450 million in its first close by year-end, Chief Executive Gregory Smith said. The C$750 million-targeted fund will be capped at C$1 billion.

The fund, which focuses on North American infrastructure opportunities, has received interest from pension funds, insurance companies and other institutional asset managers, he said. It primarily targets investors from North America and Europe.

Bond yields near historic lows and equity market volatility have prompted many big investors in recent years to allocate more capital to alternative assets such as infrastructure, real estate, private equity and hedge funds.

"Investors want to be in the asset class. Infrastructure offers very low volatility, it offers great inflation protection and it offers a strong return alternative," Smith said in an interview, adding it has a very low correlation to fixed income and public equities.

The appeal of infrastructure has led to increased competition for assets from major players like pension and sovereign wealth funds and private equity firms.

Smith said that InstarAGF hopes to focus on midmarket infrastructure plays not targeted by major managers.

"The gap in infrastructure is in the municipality level," he said.   Continued...

Gregory Smith, chief executive of InstarAGF, speaks at an interview in Toronto, Ontario, September 29, 2015.   REUTERS/John Tilak