Infrastructure Fund of Funds

Italian Pension Fund | 2021

Engagement at a glance

Infrastructure Fund of Funds

An Italian pension fund was seeking to allocate EUR 40 million to one or more infrastructure fund of funds managers who could provide diversified exposure to global markets, targeting mid- to high-single-digit returns. This was the investor’s first allocation to diversified infrastructure.

Client-specific Concerns

The investor had a preference for a manager that could offer a main exposure to primary and co-investment opportunities, and secondaries on an opportunistic basis. Key requirements included: strong exposure to the European and North American markets within a global (OECD) remit and the ability to comply with the client’s ESG-related filters, including country and company exclusion lists. The client sought to invest via a Luxembourg investment vehicle and required EUR-denominated structures.


  • Exploring different implementation options: As part of its preparatory work with the client, bfinance supported the pension fund’s team in setting out routes that could deliver the desired exposures (including listed infrastructure and open-ended funds) and subsequently mapped out the fund of funds manager universe prior to initiating a manager search process.

  • Designing a two-manager solution to cover infrastructure primaries, secondaries and co-investments: Over the course of the search, it became clear to the investor that there was a compelling opportunity to commit to infrastructure secondaries and split the allocation between a strategy targeting primaries and co-investments and a strategy more focused on secondaries.

  • Scrutinising the dual layer of fees: Fees for multi-manager strategies can often appear attractive at the headline level, although these often mask an additional layer of fees incurred by the fund of funds manager with its underlying managers. Understanding the overall level of leakage (at both levels) and the approach taken by fund of fund managers to minimise the dual layer of fees was important to the client.

  • Optimising the level of commitment to meet the targeted level of exposure: In private markets, a target commitment is not the same as targeted exposure given the pace at which capital commitments are deployed by managers. For multi-manager strategies, this fact is exacerbated by the top-level manager allocating capital over a multi-year period to underlying managers – who are, in turn, deploying capital over a multi-year period. For this investor, achieving its targeted level of exposure within three years was critical. The proposed allocation splits (across primary funds, secondary funds and co-investments) had significant implications for the investor’s cash flow profile and exposures. Bfinance supported the investor in analysing and optimising the level of capital commitment to meet its targeted level of exposure.

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