(Bloomberg)—Carlyle Group Inc. is looking to raise about $2 billion for a fund that will focus on high-yield private debt for infrastructure projects, according to people familiar with the matter, as alternative lenders look outside of their traditional domains to other asset classes.
The Carlyle Infrastructure Credit Fund II is set to invest in the senior and junior debt pieces of directly originated financings for projects primarily in energy transition opportunities. That includes sectors such as renewable energy, digital infrastructure and social infrastructure, said the people, who declined to be identified as the details are private. The funds will also target infrastructure assets outside of energy transition.
Global Head of Carlyle Infrastructure Credit Erik Savi and Deputy Global Head of Carlyle Infrastructure Credit Manish Taneja are among those involved in the marketing efforts, the people said.
A Carlyle representative declined to comment.
Infrastructure projects have long been one of alternative lenders’ preferred investments, according to an Ellington Management Group report seen by Bloomberg, which discusses opportunities in commercial real estate. Infrastructure projects, such as airport constructions, utilities or roads, tend to be more cashflow-stable and less volatile than other asset classes.
Carlyle raised a prior version of the fund in 2020 but for just a fraction of this latest round: around $600 million, a person said. In this round, the Washington, D.C.-based firm is telling investors the fund will target net returns of 9% in unlevered deals, rising to a range of 10% to 12% for levered transactions, the people said. Carlyle is marketing its latest version of the infrastructure fund as a way to help institutional investors such as pension funds and insurance companies reduce exposure in the forthcoming expected recession.
Carlyle Group is a global asset manager investing across credit, real estate and private equity, and has been involved in large infrastructure projects such as the New Terminal One at JFK airport in New York.
--With assistance from Dawn Lim.
To contact the reporter on this story: Carmen Arroyo in New York at [email protected].
To contact the editors responsible for this story: Nina Trentmann at [email protected]
Andrew Kostic, Allan Lopez.
© 2023 Bloomberg L.P.
