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Keppel’s Pierfront Capital gearing up for new fund

Pierfront Capital, a Singapore-based, infrastructure-focused private credit investment firm, is gearing up to launch a new fund next year, CEO and CIO Stéphane Delatte told Infralogic.

The fund manager, which is owned by Singapore’s Keppel Corporation, is targeting roughly USD 1bn for its third and latest vintage, subject to market conditions, he said.

The firm’s existing Fund II has been substantially deployed across 17 investments, although some dry powder remains thanks to recycled capital. Of the vehicle’s 17 deals, three have been exited.

Pierfront Capital, with about USD 1bn in assets under management, invests in investment grade-level senior secured debt for core operating infrastructure assets.

“The firm provides private credit financing solutions for operating platforms with assets across the Asia-Pacific region, which may not be suited for traditional bank facilities,” said Delatte.

Fund III will adopt a similar investment approach as its predecessors. The corporate lender targets operators with an average EBITDA of USD 160m. Loan-to-value ratios are less than 50% on average per transaction.

Pierfront Capital spends USD 20m-USD 60m per average cheque, although ticket sizes can go up to USD 200m-USD 300m with co-investments, he said.

The investment firm targets a US dollar low-mid teens internal rate of return, following average holding periods of three to five years. It seeks to exit investments through bank refinancings, bond offerings, or IPOs.

The bulk of Pierfront’s portfolio is spoken for by Indonesia, Vietnam, Malaysia, Singapore, and India, which together represent 75%, he said. Australia and Japan make up for the remainder.

Renewables account for nearly 30% of investments, followed by digital infrastructure which contributes about 20%, said Delatte. The rest is evenly split between transport and logistics, and social infrastructure.

In September 2022, Pierfront raised around USD 700m including co-investment commitments for its second vintage, Keppel-Pierfront Private Credit Fund. Limited partners (LPs) in Fund II included Alberta Investment Management Corporation, AIIB, GCM Grosvenor, Manulife, and Affin Hwang Asset Management.

Established in 2015, the firm committed USD 400m in 15 investments from its debut vintage, Pierfront Capital Mezzanine Fund. Out of the 15 investments, it has exited 13.

The fund manager, established by Temasek’s Clifford Capital, was owned 50:50 by the latter and Keppel Capital, before becoming 100% owned by Keppel in October.

In November 2019, Keppel Capital bought its initial 50% stake in Pierfront for around USD 7.8m.