Legal & General Group Plc’s digital infrastructure fund has topped £520m at its first close.
L&G said the UK & Europe-focused fund, which will see a second close later this year, will be invested in data centres, fibre, wireless connectivity and cloud services as it looks to expand its private markets proposition.
According to L&G, there is a £2 trillion gap in funding needed by 2030 to meet accelerating demand for digital infrastructure. Through the fund it aims to invest in high-quality, productive and fast-growing businesses and assets that advance digital transformation and enhance connectivity.
The fund will be invested primarily in Europe and the UK with a smaller, selective global allocation, expected to be focused mainly on the US.
The fund attracted a diverse mix of institutional capital including third-party commitments from local government pension schemes, specialist infrastructure funds and global asset managers, with L&G investing alongside clients via its balance sheet.
It follows the final close earlier this year of the L&G NTR Clean Power (Europe) Fund, in partnership with renewable energy specialist NTR, which raised around the same amount to invest in renewable energy assets.
“Infrastructure is a key tenet of our expanding private markets platform and a global, generational investment opportunity,” said Bill Hughes, head of private markets, asset management at L&G.
“As early investors in digital infrastructure, we’ve built strategic partnerships and deployed capital into assets that are essential to economic resilience and long-term productivity.
“This first close adds to the strong momentum across our infrastructure offering, as we continue to back the businesses and assets that will drive the energy transition and digital economy, whilst seeking to deliver long-term value for investors.”
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In 2019, L&G made a strategic investment in Kao Data, a UK developer and operator of high-performance data centres, which has since expanded to seven facilities across four locations and continues to grow.
Other significant investments include a £750m hyperscale data centre development in Newham.
Jack Colbourne, a former partner and investment committee chair at €10 billion AUM European mid-market Arcus Infrastructure Partners, has been appointed as a non-executive director on the fund’s investment committee.
L&G has also hired Achal Arora as managing director – digital infrastructure investments. He joins from Macquarie Asset Management, where he was managing director in the European digital infrastructure team.