Ardian is preparing to launch a mid-market infrastructure fund focused on Europe and the Americas with a USD 5bn target, according to three sources familiar with the process and a document seen by Infralogic, echoing increasing appetite for the sector from limited partners.

The large-cap French manager hopes to launch the midcap vehicle in the second half of this year, according to the document related to the fundraise.

In recent years, Ardian has launched two mid-market funds focused on the Americas: Ardian Americas Infrastructure Fund IV, which hit close in 2018 at USD 800m, and Ardian Americas Infrastructure Fund V, which hit final close at USD 2.1bn in 2022.

However, it has invested in Europe in recent vintages via large cap funds that typically target much bigger deals. Its latest flagship fund, Ardian Infrastructure Fund VI, which reached final close last October at EUR 11.5bn, has bought stakes in trophy assets such as Heathrow Airport, albeit backed by large amounts of coinvestment capital.

One noteworthy element to Ardian’s planned mid–cap strategy is that it plans to target Europe and the Americas. This makes it a broader strategy geographically to all of Ardian’s flagship funds to date, which have focused largely on Europe with only a smallish allocation for North America.

The move by Ardian takes place as larger managers that started life effectively as small mid-market investors have made a pivot back to the mid-market.

Fellow large-cap French manager, Antin Infrastructure Partners, launched its inaugural mid-market fund, Antin Infrastructure Partners Mid Cap I, in June 2021 at its EUR 2.2bn hard cap versus a EUR 1.5bn target, targeting deals in Europe and North America. Antin is, like Ardian, now preparing to launch its second midcap fund in the second half of this year.

Appetite for mid-market infrastructure funds among limited partners is strong, evidenced by the success many had last year in fundraising.

This is particularly the case in Europe, where most infrastructure funds that closed last year were focused on the mid market.

Campbell Lutyens’ Gordon Bajnai told Infralogic recently that “many LPs tell us they want more mid-market managers, particularly diversified ones in the USD 2bn to USD 8bn range”.

This is partly driven by mid-market GPs being seen by many LPs to hold “more routes to exit” compared to larger funds, he added.

One investor said “LPs are focusing on how mid-market investments can provide diversification, access to earlier stage projects, and higher exits”.

Ardian in its document related to the mid–cap fund describes the mid–market as a “compelling market opportunity” particularly given that assets in this sector offer “levers for operational optimisation”.

They also offer potential growth of portfolio companies “asset base” as well as “data driven enhancement thanks to digital tools”, the document adds.

Some 35% of global infrastructure deals are in the midmarket sector, with some 150 deals done globally each year with total value of some USD 200bn, the document also states.

Ardian said in the document that it has managed six mid-market infrastructure funds since launching back in 2005 – the rest having been large cap funds.

Its four most recent mid-market funds – which include the two Ardian Americas Infrastructure funds – have realised 17% realised gross IRR and 2x realised gross value, according to the Ardian document.

The other two funds reach further back into Ardian’s history: Ardian Infrastructure Fund III, which hit final close in 2013 at EUR 1.45bn, and Ardian Infrastructure Fund IV, which closed at EUR 2.6bn in 2016.

Ardian declined to comment.