KBRA Affirms the Rating Assigned to a Capital Call Facility to DIF Infrastructure VI Coöperatief U.A.

KBRA UK (KBRA) affirms the A rating assigned to a Revolving Credit Facility (the "Facility") to DIF Infrastructure VI Coöperatief U.A. (“DIF Infra VI” or the “Fund”) provided by a syndicate of lenders (the “Lenders”). The Outlook is Stable. The rating was requested by DIF Management B.V. (“CVC DIF” or the “Manager”) as the manager of the Fund.

The Facility is a multi-currency committed secured revolving credit facility with a current facility size of €550 million, following a downsize from €650 million in December 2024. The Facility is used for working capital and investment purposes. The Facility's maturity date has recently been extended to December 2026 (previously June 2025). The Lenders benefit from a market standard security package consisting of security over: (i) the LPs’ UCC, the rights to issue capital calls and receive proceeds of the capital contributions; and (ii) the collateral accounts into which such capital contributions are required to be paid. Following an enforcement event, the Agent has enforcement rights including the right to accelerate the Facility, prevent withdrawals from the collateral accounts and to issue a capital call directly to the LPs for the purpose of repaying all amounts due under the Facility.

DIF Infrastructure VI Coöperatief U.A. is a 2019 vintage fund which had its final close in October 2020, raising €3,030 million in commitments. DIF Infra VI is the sixth vintage in CVC DIF’s infrastructure fund strategy, investing in public private partnerships, concessions, utilities, renewable energy projects and other low-risk infrastructure investments with similar characteristics, predominantly in Europe, North America, Latin America and Oceania.

Key Credit Considerations

Asset Coverage: The primary collateral and source of repayment for the Facility is the uncalled committed capital of the Fund. On an ongoing basis, the Fund is required to comply with a Remaining Commitment Event which stipulates that the aggregate amount of all outstanding utilisations and any other amounts borrowed should be less than 76.9% of the remaining commitments from the collective borrowing base. This is equivalent to 130% coverage on the uncalled commitments. Furthermore, the sum of 25% of the Net Asset Value of the Fund and 76.9% of the uncalled commitments should be greater than outstanding utilisation, company guarantees, hedging and any other amounts borrowed. As of the most recent Compliance Certificate provided for 31 March 2025, the Borrowers have €761.5 million of UCC and as such are in compliance with the financial covenant. Considering the Remaining Commitment Event, the minimum asset coverage is equivalent to 130% coverage based on the total LP base.

Alignment of Interests: A failure to fulfil a capital call can result in the loss of rights to distributions from the Fund as well as the potential to be restricted from investing in future private capital opportunities. Furthermore, in the event an LP defaults in respect of its obligation to meet capital contributions, the defaulting LP is subject to the application of various default provisions. Such provisions include but are not limited to: (i) declaration of defaulting LP’s drawable commitments due and payable; (ii) suspension of distributions to defaulting LP; (iii) forfeiting the defaulting LP’s interest in the Fund; and (iv) selling all or any part of the defaulting LP’s interest. All these provisions are strong incentives for LPs to meet capital calls.

Quality of Limited Partner Commitments: KBRA’s assessment of the Limited Partner credit quality considered a combination of KBRA ratings, third-party public ratings and an independent, internal review of the unrated investors comprising the Fund as of March 2025. Of the total LP base, approximately 80% have ratings (either directly or indirectly through an affiliated or parent entity). KBRA evaluated the remaining LPs that are not rated with the information available on the underlying LP. Incorporating both the public ratings and KBRA evaluations, approximately 81% of the Fund's LP base is estimated to be equivalent to investment grade credit quality. Overall, the credit quality of the LP base remains consistent strong, similar to the LP base evaluated at issuance of the rating in August 2024.

Limited Partner Diversification: Diversification of LP commitments is determined utilising an adjusted Herfindahl-Hirschman Index (HHI). As of March 2025, the Fund’s total capital commitments were unchanged since issuance of the rating at €3,030 million, received from approximately 111 LPs which are all deemed Eligible LPs. The adjusted HHI 41.9 represents a significantly diverse LP base and is in line with the adjusted HHI as at issuance with a HHI 41.3 and 106 LPs.

Additional Claim to Distributions/Illiquid Assets: To the extent that some or all the LPs default on their obligation to fulfil capital calls and repay the Facility, the Lenders may have recourse to other assets of the Fund as an unsecured creditor of the Fund. While this is credit positive and offers a secondary repayment source for this Facility, the assets of the Fund consist of infrastructure investments which KBRA views as illiquid relative to other asset classes and there is no certainty with regards to the ability of the Fund to sell and realise sufficient value from these assets.

Manager Experience: Founded in 2005, DIF Management B.V. is a global operating infrastructure investor with approximately €19 billion of assets under management. CVC DIF manages two distinct investment strategies comprising of the traditional Infrastructure Funds and the Core Infrastructure Funds. In July 2024, CVC Capital Partners closed its acquisition of a majority stake in DIF Management B.V., with the intention to acquire the remaining shares over a five-year period.

Rating Sensitivities

It should be noted that many aspects, including but not limited to, the rating sensitivities listed below, macroeconomic factors, market conditions, competitive landscape, and a fund manager’s investment acumen can impact the performance of the fund and influence KBRA’s rating decisions. If performance of the transaction differs meaningfully from the expected levels, KBRA may consider making a rating change.

Decline in LP Credit Quality

A decline in the credit quality of the Fund’s LPs as a result of: (i) deterioration in the credit quality of underlying LPs; (ii) transfer of interests to LPs of lower credit quality characteristics; (iii) inclusion of LPs with weak credit quality characteristics; and (iv) weaker than expected LP diversification, may result in negative rating changes.

Improvement in LP Credit Quality

An overall higher credit quality of the Fund’s LPs as a result of: (i) improvement in the credit quality of underlying LPs; (ii) transfer of interests to LPs with better credit characteristics; (iii) inclusion of LPs with strong credit quality characteristics; and (iv) stronger than expected LP diversification, may result in positive rating changes.

Underperformance of Fund Assets or Investments

A decrease in the Fund’s NAV due to underperformance of the Fund’s underlying assets or investments may jeopardise debt repayment as the deterioration of the Fund may, for example, elicit hesitation of the Fund’s LPs to fund their respective capital calls regardless of their contractual obligations to do so and the underlying LPs’ security and protections to the Lender.

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Methodologies