InfraRed Capital Partners is preparing to launch its seventh value-add infrastructure fund, which will target some USD 1.5bn, according to sources familiar with the matter.

The London-based manager is preparing InfraRed Infrastructure Fund VII (InfraRed VII), a vehicle that will target development stage infrastructure assets aiming to achieve a net IRR of 15%, the sources added.

The fund, which according to one source will have a hard cap of USD 2bn, will be diversified across OECD markets, focusing on transport, energy transition, digital infrastructure and social infrastructure sectors.

Fund VII is expected to continue to target value-add investments in the lower mid market, following InfraRed’s long-standing strategy, with each investment typically ranging between USD 100m and USD 200m, added one source.

The exact timeline for launch is not clear.

The new fund’s strategy will be similar to that of fund VI, which closed above USD 1bn (EUR 951m) in November 2023 against a target of USD 1.5bn.

Fund VI already deployed over 80% of its capital across seven transactions at the time of the final closing.

Other fund VI portfolio companies include Finnish heat pump business Voltan Energy, UK home energy management company Wondrwall, and Dublin- and Munich-based e-mobility company JOLT Energy.

InfraRed’s previous value-add vehicle, InfraRed V, launched in 2016 and closed at USD 1.2bn in 2018.

The firm recently appointed James Abbott, formerly COO and general counsel at John Laing, as its chief operating officer.

InfraRed, a subsidiary of Canadian insurer Sun Life, manages around USD 13bn of equity and has offices in London, Madrid, New York, Sydney and Seoul.

InfraRed did not respond to a request for comment.