Canadian-based Cordiant is speaking to potential anchor investors for the fund, Cordiant IX, co-Chief Executive Benn Mikula told Reuters. He added that he expected some investors in the fund to commit an additional $350 million, alongside the fund but not in it, in the form of co-investments in the same telecoms infrastructure.
The fund will aim to capitalize on the increasing global need for new infrastructure as 5G technology prompts a worldwide increase in mobile data consumption and telecoms operators seek to share the cost.
"The carriers are finding that the cost of maintaining the client relationship, spending on their core networks and the client experience, whilst also investing in the plumbing and infrastructure of their network is extraordinarily expensive," Mikula said.
The new technology typically required more towers to be built to ensure wireless coverage, more fiber connections and more data centres, with Europe lagging other regions in rolling it out, added Steven Marshall, Cordiant's chairman of telecoms.
Among recent activity, Cellnex Telecom agreed to buy Portuguese tower operator OMTEL, while Telecom Italia and Vodafone are expected to kick off a sale of a stake in their Italian towers business.
Cordiant's fund would be the sixth biggest of 11 telecoms-focused funds currently in the global market raising money, data from industry tracker Preqin showed. The biggest is Melody Communications Infrastructure Fund II, seeking $1.5 billion.
"Our pipeline is sufficiently robust that we could deploy all of that capital out of the gate," Mikula said.
Cordiant was founded in Montreal in 1999 with backing from the Ontario Teachers' Pension Plan and launched four funds before being bought in 2015 by Mikula and partner Jean-Francois Sauve.
Since then, it has launched several further funds focused on infrastructure and other physical assets including Cordiant VIII, which is still raising money to invest in Brazil's agriculture industry.
Total capital deployed since the takeover is around $2.1 billion, most of which came from institutional investors such as pension schemes and family wealth offices in Europe and the United States.
Ahead of the launch of the telecoms fund, Mikula said the firm had hired two new senior dealmakers, David Kippen and Hagai Shilo, both of whom previously worked at JPMorgan, where Mikula ran the European technology and telecoms team.
Kippen, who will divide his time between Montreal and London, has completed more than 40 private equity and M&A deals with a combined value of more than $30 billion.
By Simon Jessop