StepStone Private Infrastructure Fund (STDUX)
Filed: 6 Jun 24, 1:47pm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-23848
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StepStone Private Infrastructure Fund
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(Exact name of registrant as specified in charter)
128 S Tryon St., Suite 1600
Charlotte, NC 28202
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(Address of principal executive offices) (Zip code)
Robert W. Long
Chief Executive Officer
StepStone Group Private Wealth LLC
128 S Tryon St., Suite 1600
Charlotte, NC 28202
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(Name and address of agent for service)
Registrant’s telephone number, including area code: (704) 215-4300
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Date of fiscal year end: March 31
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Date of reporting period: March 31, 2024
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ITEM 1. REPORTS TO STOCKHOLDERS.
(a) The Report to Shareholders is attached herewith.
StepStone Private Infrastructure Fund
Consolidated Financial Statements
For the Period September 11, 2023* through March 31, 2024
Annual Report
* The Fund commenced operations on September 11, 2023. See Note 1 in the accompanying notes to consolidated financial statements.
Beginning on March 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting the Fund or your financial intermediary. You may elect to receive all future reports, including your shareholder reports, in paper free of charge by contacting the Fund at 704-215-4300. Your election to receive reports in paper will apply to all funds held with your financial intermediary or all StepStone Funds.
StepStone Private Infrastructure Fund
Table of Contents
For the Period Ended March 31, 2024*
* The Fund commenced operations on September 11, 2023. See Note 1 in the accompanying notes to consolidated financial statements.
The Fund files its complete schedule of investments with the Securities and Exchange Commission (“Commission”) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports are available on the Commission’s website at http://www.sec.gov.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities, as well as information relating to how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, is available (i) without charge, upon request, by calling (704) 215-4300; or through the Fund’s website at https:// www.stepstonegroup.com/what-we-do/solutions-services/private-wealth-solutions/stepstone-private-infrastructure-fund/; or both; and (ii) on the Commission’s website at http://www.sec.gov.
1
StepStone Private Infrastructure Fund
Manager’s Discussion and Analysis of Fund Performance (unaudited)
March 31, 2024
Introduction
StepStone Private Infrastructure Fund (“STRUCTURE” or the “Fund”) is a newly launched infrastructure strategy. The Fund launched in September 2023 and maintains a strategy of investing in a range of infrastructure assets , emphasizing best-in-class managers via secondary purchases, co-investments and fund investments. STRUCTURE offers accredited investors global access to top-tier infrastructure managers with exposure to private infrastructure investments and targets attractive risk-adjusted returns.
Designed specifically for individual investors and small institutions, STRUCTURE’s investor-centric structure emphasizes convenience, efficiency and transparency. An evergreen fund, STRUCTURE raises capital daily while providing liquidity through quarterly redemptions. There are no ongoing capital calls. Investors will receive dividend distributions, and tax reporting is provided via Form 1099.
Investment Activity, Performance1 and Benchmark
During the period ended March 31, 2024, the Fund made direct and indirect investments in 90 portfolio companies and reached assets under management of $85.2 million. We are pleased to report that STRUCTURE (Class I) generated a net return of 15.60% for the period ending March 31, 2024, outpacing the S&P Global Infrastructure Index,2 STRUCTURE’s primary benchmark, which reported a 8.32% gain during the same period.
The Fund deploys capital daily, allowing it to invest in a constantly evolving market. This strategy includes taking advantage of market dislocation to purchase assets managed by historically top tier managers at discounted prices compared to net asset value. Unrealized gains from secondary discounts totaled approximately $4.4 million for the period ended March 31, 2024 and were the primary driver of the Fund’s net return.
Investment Approach
STRUCTURE seeks favorable opportunities across a variety of private infrastructure investments within areas such as transportation and logistics, renewables and energy, communications/digital infrastructure, utilities, social infrastructure, natural capital and other real assets that provide necessary services to society. The Fund employs a distinctive approach to infrastructure investments, combining co-investment, secondary and fund investments under a single platform. Each capability informs the other, enhancing relationships globally, and this active approach to co-investment and secondary investment enables the capture of powerful proprietary data and the creation of strong alignment with both fund managers and company management teams. The Fund believes that these synergies ultimately enable it to focus on the highest potential opportunities and make better informed decisions.
This commentary reflects the viewpoints of StepStone Group Private Wealth LLC as of March 31, 2024 and is not intended as a forecast or guarantee of future results.
| Average Annual Total Returns as of March 31, 20241 | |||
| Since Inception3 | |||
| StepStone Private Infrastructure Fund, Class I | 15.60% | ||
| StepStone Private Infrastructure Fund, Class D | 15.60% | ||
| StepStone Private Infrastructure Fund, Class S | 11.55% | ||
| StepStone Private Infrastructure Fund, Class T | 11.55% | ||
| S&P Global Infrastructure Index2 | 8.32% | ||
2
StepStone Private Infrastructure Fund
Manager’s Discussion and Analysis of Fund Performance (unaudited) (continued)
March 31, 2024
Performance of a $1,000,000 Investment
The chart above represents the hypothetical growth of a $1,000,000 investment in Class I shares. Returns for the Fund’s other classes will vary from what is seen above due to differences in fee structures, specifically the distribution and shareholder servicing fees associated with brokers, dealers and certain Registered Investment Advisors and other financial intermediaries.
The performance data quoted herein represents past performance, and the return and value of an investment in the Fund will fluctuate so that, when redeemed, it may be worth less than its original cost. Past performance does not predict future performance.
The Fund’s performance assumes the reinvestment of dividends. Index returns assume reinvestment of dividends and, unlike a portfolio’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. Please note that one cannot invest directly in an unmanaged index.
There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change because it is actively managed and should not be considered recommendations to buy individual securities.
Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
1 Performance is cumulative and represents the percent change in NAV and assumes reinvestment of all distributions pursuant to STRUCTURE’s distribution reinvestment plan. Total returns shown assume the maximum sales load is deducted from the initial investment.
2 The S&P Global Infrastructure Index is designed to track 75 companies from around the world chosen to represent the listed infrastructure industry while maintaining liquidity and tradability. To create diversified exposure, the index includes three distinct infrastructure clusters: energy, transportation and utilities. The S&P Global Infrastructure Index is a total return index and STRUCTURE’s primary benchmark.
3 The date of inception for all share classes is September 11, 2023.
3
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Trustees of
StepStone Private Infrastructure Fund
Opinion on the Financial Statements
We have audited the accompanying consolidated statement of assets and liabilities of StepStone Private Infrastructure Fund (the “Fund”), including the consolidated schedule of investments, as of March 31, 2024, and the related consolidated statements of operations, changes in net assets, cash flows and financial highlights for the period from September 11, 2023 (commencement of operations) through March 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Fund at March 31, 2024 and the consolidated results of its operations, changes in its net assets, its cash flows and the financial highlights for the period from September 11, 2023 (commencement of operations) through March 31, 2024, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of investments owned as of March 31, 2024, by correspondence with the custodians, investment funds or portfolio company investees; when replies were not received from investment funds or portfolio company investees, we performed other auditing procedures. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
We have served as the auditor of one or more of the StepStone Group LP investment companies since 2020.
New York, New York
May 30, 2024
A member firm of Ernst & Young Global Limited
4
StepStone Private Infrastructure Fund
Consolidated Schedule of Investments
March 31, 2024
| Investments | Asset Class | Acquisition Date | Fair Value | |||||
| Secondary Investments - 43.0%1,2,3,4 | ||||||||
| Europe - 26.3% | ||||||||
| Antin Infrastructure Partners II LP *,5,6 | Infrastructure Assets | 10/02/2023 | $ | 541,124 | ||||
| Compass European Infrastructure SCSp5 | Infrastructure Assets | 11/23/2023 | 3,919,421 | |||||
| EQT Infrastructure Fund II (No.1) SCSp *,5 | Infrastructure Assets | 11/08/2023 | 139,085 | |||||
| EQT Infrastructure Fund III (No.1) SCSp*,5 | Infrastructure Assets | 11/08/2023 | 578,848 | |||||
| EQT Infrastructure IV (No.2) USD SCSp*,5,7 | Infrastructure Assets | 10/10/2023 | 8,852,205 | |||||
| iCON Infrastructure Partners III, L.P.*,5,7 | Infrastructure Assets | 09/29/2023 | 3,639,935 | |||||
| InfraVia European Fund III SCSp5,6 | Infrastructure Assets | 10/19/2023 | 4,727,290 | |||||
| Total Europe | 22,397,908 | |||||||
| North America - 16.7% | ||||||||
| Brookfield Americas Infrastructure Fund, L.P.5,8 | Infrastructure Assets | 09/29/2023 | 174,785 | |||||
| Brookfield Infrastructure Fund III-A, L.P.5,8 | Infrastructure Assets | 09/29/2023 | 1,950,929 | |||||
| Brookfield Infrastructure Fund IV (ER) SCSP5,8 | Infrastructure Assets | 01/30/2024 | 3,992,667 | |||||
| Global Energy & Power Infrastructure Fund II, L.P.*,5,9 | Infrastructure Assets | 10/05/2023 | 947,853 | |||||
| Global Infrastructure Partners III-C, L.P.5,8 | Infrastructure Assets | 09/29/2023 | 4,269,784 | |||||
| KKR Global Infrastructure Investors II (EEA) L.P.5,7 | Infrastructure Assets | 01/01/2024 | 479,837 | |||||
| Stonepeak Infrastructure Fund II LP5,9 | Infrastructure Assets | 10/02/2023 | 758,699 | |||||
| Stonepeak Infrastructure Fund LP*,5,9 | Infrastructure Assets | 10/02/2023 | 1,624,273 | |||||
| Total North America | 14,198,827 | |||||||
| Total Secondary Investments (Cost $31,987,129) | 36,596,735 | |||||||
| Short-Term Investments - 11.8% | ||||||||
| Fidelity Investments Money Market Government Portfolio - Class I, 5.21% (10,103,322 shares)10,11 | 10,103,322 | |||||||
| Total Short-Term Investments (Cost $ 10,103,322) | 10,103,322 | |||||||
| Total Investments - 54.8% (Cost $ 42,090,451) | $ | 46,700,057 | ||||||
| Other assets in excess of liabilities - 45.2% | 38,467,683 | |||||||
| Net Assets - 100.0% | $ | 85,167,740 | ||||||
The accompanying notes are an integral part of these consolidated financial statements
5
StepStone Private Infrastructure Fund
Consolidated Schedule of Investments (continued)
March 31, 2024
| * | Investment is non-income producing. |
| 1 | Geographic region generally reflects the location of the investment manager. |
| 2 | Investments do not issue shares or hold outstanding principal, except where noted. Terms shares and units are used interchangeably. |
| 3 | Investments do not allow redemptions or withdrawals except at discretion of its general partner, manager or advisor and the final distribution date is not known at this time, except where noted. |
| 4 | Private investments are generally issued in private placement transactions and as such are generally restricted as to resale. There are no circumstances that could cause a lapse in the restriction to resale. Each investment may have been purchased on various dates and for different amounts. The date of the first purchase is reflected under acquisition date as shown in the Consolidated Schedule of Investments. Total fair value of restricted investments as of March 31, 2024 was $36,596,735, or 43.0% of net assets. As of March 31, 2024, the aggregate cost of each investment restricted to sale was $541,742, $3,678,275, $195,542, $376,549, $7,306,937, $3,629,518, $3,418,258, $125,236, $1,558,828, $3,978,071, $1,114,387, $3,697,952, $267,679, $630,322 and $1,467,833 respectively, totaling $31,987,129. |
| 5 | Investment has been committed to but has not been fully funded by the Fund. See Note 3. |
| 6 | Security is held by STRUCTURE Cayman II LLC. |
| 7 | Security is held by STRUCTURE Cayman III LLC. |
| 8 | Security is held by STRUCTURE Cayman IV LLC. |
| 9 | Security is held by STRUCTURE Cayman LLC. |
| 10 | The audited financial statements of the fund can be found at sec.gov. |
| 11 | The rate reported is the 7-day effective yield at the period end. |
The accompanying notes are an integral part of these consolidated financial statements
6
StepStone Private Infrastructure Fund
Consolidated Schedule of Investments (continued)
March 31, 2024
| Summary of Investments by Strategy (as a percentage of total investments) | ||||
| Secondary Investments | 78.4 | % | ||
| Short-Term Investments | 21.6 | % | ||
| Total Investments | 100.0 | % | ||
The accompanying notes are an integral part of these consolidated financial statements
7
StepStone Private Infrastructure Fund
Consolidated Statement of Assets and Liabilities
March 31, 2024
| Assets | ||||
| Investments, at fair value (cost $42,090,451) | $ | 46,700,057 | ||
| Cash and cash equivalents | 37,253,922 | |||
| Cash denominated in foreign currency (cost $378,344) | 376,623 | |||
| Investments paid in advance | 1,393,371 | |||
| Receivable for fund shares sold | 767,500 | |||
| Due from Adviser | 339,628 | |||
| Deferred offering and organizational costs | 225,750 | |||
| Dividend and interest receivable | 203,530 | |||
| Distributions receivable from investments | 29,073 | |||
| Prepaid expenses | 10,938 | |||
| Total Assets | 87,300,392 | |||
| Liabilities | ||||
| Revolving credit facility | — | |||
| Less deferred debt issuance costs | (360,120 | ) | ||
| Revolving credit facility less deferred debt issuance costs | (360,120 | ) | ||
| Payable for investments purchased | 1,964,310 | |||
| Professional fees payable | 252,781 | |||
| Management fees payable | 111,181 | |||
| Trustees’ fees payable | 40,001 | |||
| Transfer agent fees payable | 39,963 | |||
| Revolving credit facility fees payable | 21,966 | |||
| Administration fees payable | 15,982 | |||
| Other accrued expenses | 46,588 | |||
| Total Liabilities | 2,132,652 | |||
| Commitments and contingencies (see Note 8) | ||||
| Net Assets | $ | 85,167,740 | ||
| Composition of Net Assets: | ||||
| Paid-in capital | $ | 80,585,751 | ||
| Total distributable earnings | 4,581,989 | |||
| Net Assets | $ | 85,167,740 | ||
| Class I: | ||||
| Net Assets | $ | 85,133,066 | ||
| Outstanding Shares | 7,365,650 | |||
| Net Asset Value Per Share | $ | 11.56 | ||
| Class D: | ||||
| Net Assets | $ | 11,558 | ||
| Outstanding Shares | 1,000 | |||
| Net Asset Value Per Share | $ | 11.56 | ||
| Class S: | ||||
| Net Assets | $ | 11,558 | ||
| Outstanding Shares | 1,000 | |||
| Net Asset Value Per Share | $ | 11.56 | ||
| Class T: | ||||
| Net Assets | $ | 11,558 | ||
| Outstanding Shares | 1,000 | |||
| Net Asset Value Per Share | $ | 11.56 | ||
The accompanying notes are an integral part of these consolidated financial statements
8
StepStone Private Infrastructure Fund
Consolidated Statement of Operations
For the Period Ended March 31, 2024*
| Investment Income | ||||
| Dividend income (net of taxes withheld of $5,443) | $ | 505,336 | ||
| Interest income | 637,227 | |||
| Total Investment Income | 1,142,563 | |||
| Expenses | ||||
| Amortization of offering and organizational costs | 482,820 | |||
| Management fees | 462,737 | |||
| Professional fees | 455,165 | |||
| Revolving credit facility fees | 348,045 | |||
| Trustees’ fees | 160,001 | |||
| Administration fees | 66,518 | |||
| Transfer agent fees | 60,834 | |||
| Other expenses | 116,235 | |||
| Total Expenses | 2,152,355 | |||
| Adviser expense reimbursement | (1,053,839 | ) | ||
| Net Expenses | 1,098,516 | |||
| Net Investment Income (Loss) | 44,047 | |||
| Net Realized Gain (Loss) and Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency | ||||
| Net realized gain distributions from investments | 61,722 | |||
| Net realized loss on foreign currency transactions | (157,996 | ) | ||
| Net change in unrealized appreciation (depreciation) on investments | 4,609,606 | |||
| Net change in unrealized appreciation (depreciation) on foreign currency translation | (1,721 | ) | ||
| Net Realized Gain (Loss) and Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency | 4,511,611 | |||
| Net Increase (Decrease) in Net Assets from Operations | $ | 4,555,658 | ||
| * | The Fund commenced operations on September 11, 2023. See Note 1 in the accompanying notes to consolidated financial statements. |
The accompanying notes are an integral part of these consolidated financial statements
9
StepStone Private Infrastructure Fund
Consolidated Statement of Changes in Net Assets
| For the Period Ended March 31, 2024* | ||||
| Change in Net Assets Resulting from Operations: | ||||
| Net investment income (loss) | $ | 44,047 | ||
| Net realized gain (loss) on investments and foreign currency transactions | (96,274 | ) | ||
| Net change in unrealized appreciation (depreciation) on investments and foreign currency translation | 4,607,885 | |||
| Net Increase (Decrease) in Net Assets Resulting from Operations | 4,555,658 | |||
| Change in Net Assets Resulting from Capital Share Transactions: | ||||
| Class I | ||||
| Proceeds from shares issued | 81,456,531 | |||
| Reinvestment of distributions | — | |||
| Repurchase of shares | (874,449 | ) | ||
| Exchange of shares | — | |||
| Total Class I Transactions | 80,582,082 | |||
| Class D | ||||
| Proceeds from shares issued | 10,000 | |||
| Reinvestment of distributions | — | |||
| Repurchase of shares | — | |||
| Exchange of shares | — | |||
| Total Class D Transactions | 10,000 | |||
| Class S | ||||
| Proceeds from shares issued | 10,000 | |||
| Reinvestment of distributions | — | |||
| Repurchase of shares | — | |||
| Exchange of shares | — | |||
| Total Class S Transactions | 10,000 | |||
| Class T | ||||
| Proceeds from shares issued | 10,000 | |||
| Reinvestment of distributions | — | |||
| Repurchase of shares | — | |||
| Exchange of shares | — | |||
| Total Class T Transactions | 10,000 | |||
| Change in Net Assets Resulting from Capital Share Transactions | 80,612,082 | |||
| Total Increase (Decrease) in Net Assets | 85,167,740 | |||
| Net Assets | ||||
| Beginning of period | — | |||
| End of period | $ | 85,167,740 | ||
| * | The Fund commenced operations on September 11, 2023. See Note 1 in the accompanying notes to consolidated financial statements. |
The accompanying notes are an integral part of these consolidated financial statements
10
StepStone Private Infrastructure Fund
Consolidated Statement of Cash Flows
For the Period Ended March 31, 2024*
| Cash Flows From Operating Activities | ||||
| Net increase (decrease) in net assets from operations | $ | 4,555,658 | ||
| Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: | ||||
| Purchases of investments | (32,398,325 | ) | ||
| Purchases of short-term investments, net | (10,103,322 | ) | ||
| Distributions received from investments | 472,918 | |||
| Net realized gain distributions from investments | (61,722 | ) | ||
| Net change in unrealized (appreciation) depreciation on investments | (4,609,606 | ) | ||
| (Increase)/Decrease in Assets | ||||
| Investments paid in advance | (1,393,371 | ) | ||
| Due from adviser | (339,628 | ) | ||
| Deferred offering and organizational costs | (225,750 | ) | ||
| Dividend and interest receivable | (203,530 | ) | ||
| Distributions receivable from investments | (29,073 | ) | ||
| Prepaid expenses | (10,938 | ) | ||
| Increase/(Decrease) in Liabilities | ||||
| Payable for investments purchased | 1,964,310 | |||
| Professional fees payable | 252,781 | |||
| Management fees payable | 111,181 | |||
| Trustees’ fees payable | 40,001 | |||
| Transfer agent fees payable | 39,963 | |||
| Revolving credit facility fees payable | 21,966 | |||
| Administration fees payable | 15,982 | |||
| Other accrued expenses | 46,588 | |||
| Net Cash Used in Operating Activities | (41,853,917 | ) | ||
Cash Flows from Financing Activities | ||||
| Proceeds from issuance of shares, net of receivable for fund shares sold | 80,719,031 | |||
| Repurchase of shares | (874,449 | ) | ||
| Proceeds from revolving credit facility | 24,800,000 | |||
| Repayments of revolving credit facility | (24,800,000 | ) | ||
| Debt issuance costs | (501,184 | ) | ||
| Amortization of debt issuance costs | 141,064 | |||
| Net Cash Provided by Financing Activities | 79,484,462 | |||
| Net Increase in Cash and Cash Equivalents and Cash Denominated in Foreign Currency | 37,630,545 | |||
| Cash and Cash Equivalents and Cash Denominated in Foreign Currency | ||||
| Beginning of period | — | |||
| End of period | $ | 37,630,545 | ||
| End of Period Balances | ||||
| Cash and cash equivalents | $ | 37,253,922 | ||
| Cash denominated in foreign currency | 376,623 | |||
| End of Period Balance | $ | 37,630,545 | ||
The accompanying notes are an integral part of these consolidated financial statements
11
StepStone Private Infrastructure Fund
Consolidated Statement of Cash Flows (continued)
For the Period Ended March 31, 2024*
| Supplemental Disclosure of Cash Flow Information | ||||
| Cash paid during the year for interest expense and commitment fees | $ | 185,015 |
| * | The Fund commenced operations on September 11, 2023. See Note 1 in the accompanying notes to consolidated financial statements. |
The accompanying notes are an integral part of these consolidated financial statements
12
StepStone Private Infrastructure Fund
Consolidated Financial Highlights
Class I
Per share operating performance for a capital share outstanding throughout each period
| For the Period Ended March 31, 2024* | ||||
| Per Share Operating Performance: | ||||
| Net Asset Value per share, beginning of period | $ | 10.00 | ||
| Activity from investment operations: | ||||
| Net investment income (loss)1 | 0.01 | |||
| Net realized gain (loss) and change in unrealized appreciation (depreciation) on investments and foreign currency translation | 1.55 | |||
| Total from investment operations | 1.56 | |||
| Net Asset Value per share, end of period | $ | 11.56 | ||
| Net Assets, end of period (in thousands) | $ | 85,133 | ||
| Ratios to average shareholders’ equity: | ||||
| Net investment income (loss)2 | 0.46 | % | ||
| Gross expenses3 | 7.17 | % | ||
| Adviser expense reimbursement4 | (3.66 | )% | ||
| Net expenses3 | 3.51 | % | ||
| Total return5,6 | 15.60 | % | ||
| Portfolio turnover rate7 | — | % | ||
| Senior Securities: | ||||
| Total borrowings (000s) | $ | — | ||
| Asset coverage per $1,000 unit of senior indebtedness8 | N/A | |||
| * | The Fund commenced operations on September 11, 2023. See Note 1 in the accompanying notes to consolidated financial statements. |
| 1 | Per share data calculated using average shares outstanding during the period. |
| 2 | Net investment income (loss) ratio has been annualized for periods of less than twelve months, except for organizational costs which are one time expenses. |
| 3 | Expense ratios have been annualized for periods of less than twelve months, except for organizational costs. |
| 4 | Expense ratios have been annualized for periods of less than twelve months. |
| 5 | Total return based on net asset value per share reflects the change in the net asset value based on the effects of the performance of the Fund during the period and assume distributions, if any, were reinvested. Total return shown excludes the effect of applicable sales charges. |
| 6 | Total return would have been lower had certain expenses not been waived and assumed by the Adviser during periods of reimbursement. |
| 7 | Represents lesser of purchases or sales of investments for the period divided by the average monthly fair value of investments during the period. Result is not annualized. |
| 8 | Calculated by subtracting the Fund’s total liabilities (not including borrowings) from the Fund’s total assets and dividing this by the total number of senior indebtedness units, where one unit equals $1,000 of senior indebtedness. |
The accompanying notes are an integral part of these consolidated financial statements
13
StepStone Private Infrastructure Fund
Consolidated Financial Highlights (continued)
Class D
Per share operating performance for a capital share outstanding throughout each period
| For the Period Ended March 31, 2024* | ||||
| Per Share Operating Performance: | ||||
| Net Asset Value per share, beginning of period | $ | 10.00 | ||
| Activity from investment operations: | ||||
| Net investment income (loss)1 | 0.01 | |||
| Net realized gain (loss) and change in unrealized appreciation (depreciation) on investments and foreign currency translation | 1.55 | |||
| Total from investment operations | 1.56 | |||
| Net Asset Value per share, end of period | $ | 11.56 | ||
| Net Assets, end of period (in thousands) | $ | 12 | ||
| Ratios to average shareholders’ equity: | ||||
| Net investment income (loss)2 | 0.46 | % | ||
| Gross expenses3 | 7.17 | % | ||
| Adviser expense reimbursement4 | (3.66 | )% | ||
| Net expenses3 | 3.51 | % | ||
| Total return5,6 | 15.60 | % | ||
| Portfolio turnover rate7 | — | % | ||
| Senior Securities: | ||||
| Total borrowings (000s) | $ | — | ||
| Asset coverage per $1,000 unit of senior indebtedness8 | N/A | |||
| * | The Fund commenced operations on September 11, 2023. See Note 1 in the accompanying notes to consolidated financial statements. |
| 1 | Per share data calculated using average shares outstanding during the period. |
| 2 | Net investment income (loss) ratio has been annualized for periods of less than twelve months, except for organizational costs which are one time expenses. |
| 3 | Expense ratios have been annualized for periods of less than twelve months, except for organizational costs. |
| 4 | Expense ratios have been annualized for periods of less than twelve months. |
| 5 | Total return based on net asset value per share reflects the change in the net asset value based on the effects of the performance of the Fund during the period and assume distributions, if any, were reinvested. Total return shown excludes the effect of applicable sales charges. |
| 6 | Total return would have been lower had certain expenses not been waived and assumed by the Adviser during periods of reimbursement. |
| 7 | Represents lesser of purchases or sales of investments for the period divided by the average monthly fair value of investments during the period. Result is not annualized. |
| 8 | Calculated by subtracting the Fund’s total liabilities (not including borrowings) from the Fund’s total assets and dividing this by the total number of senior indebtedness units, where one unit equals $1,000 of senior indebtedness. |
The accompanying notes are an integral part of these consolidated financial statements
14
StepStone Private Infrastructure Fund
Consolidated Financial Highlights (continued)
Class S
Per share operating performance for a capital share outstanding throughout each period
| For the Period Ended March 31, 2024* | ||||
| Per Share Operating Performance: | ||||
| Net Asset Value per share, beginning of period | $ | 10.00 | ||
| Activity from investment operations: | ||||
| Net investment income (loss)1 | 0.01 | |||
| Net realized gain (loss) and change in unrealized appreciation (depreciation) on investments and foreign currency translation | 1.55 | |||
| Total from investment operations | 1.56 | |||
| Net Asset Value per share, end of period | $ | 11.56 | ||
| Net Assets, end of period (in thousands) | $ | 12 | ||
| Ratios to average shareholders’ equity: | ||||
| Net investment income (loss)2 | 0.46 | % | ||
| Gross expenses3 | 7.17 | % | ||
| Adviser expense reimbursement4 | (3.66 | )% | ||
| Net expenses3 | 3.51 | % | ||
| Total return5,6 | 15.60 | % | ||
| Portfolio turnover rate7 | — | % | ||
| Senior Securities: | ||||
| Total borrowings (000s) | $ | — | ||
| Asset coverage per $1,000 unit of senior indebtedness8 | N/A | |||
| * | The Fund commenced operations on September 11, 2023. See Note 1 in the accompanying notes to consolidated financial statements. |
| 1 | Per share data calculated using average shares outstanding during the period. |
| 2 | Net investment income (loss) ratio has been annualized for periods of less than twelve months, except for organizational costs which are one time expenses. |
| 3 | Expense ratios have been annualized for periods of less than twelve months, except for organizational costs. |
| 4 | Expense ratios have been annualized for periods of less than twelve months. |
| 5 | Total return based on net asset value per share reflects the change in the net asset value based on the effects of the performance of the Fund during the period and assume distributions, if any, were reinvested. Total return shown excludes the effect of applicable sales charges. |
| 6 | Total return would have been lower had certain expenses not been waived and assumed by the Adviser during periods of reimbursement. |
| 7 | Represents lesser of purchases or sales of investments for the period divided by the average monthly fair value of investments during the period. Result is not annualized. |
| 8 | Calculated by subtracting the Fund’s total liabilities (not including borrowings) from the Fund’s total assets and dividing this by the total number of senior indebtedness units, where one unit equals $1,000 of senior indebtedness. |
The accompanying notes are an integral part of these consolidated financial statements
15
StepStone Private Infrastructure Fund
Consolidated Financial Highlights (continued)
Class T
Per share operating performance for a capital share outstanding throughout each period
| For the Period Ended March 31, 2024* | ||||
| Per Share Operating Performance: | ||||
| Net Asset Value per share, beginning of period | $ | 10.00 | ||
| Activity from investment operations: | ||||
| Net investment income (loss)1 | 0.01 | |||
| Net realized gain (loss) and change in unrealized appreciation (depreciation) on investments and foreign currency translation | 1.55 | |||
| Total from investment operations | 1.56 | |||
| Net Asset Value per share, end of period | $ | 11.56 | ||
| Net Assets, end of period (in thousands) | $ | 12 | ||
| Ratios to average shareholders’ equity: | ||||
| Net investment income (loss)2 | 0.46 | % | ||
| Gross expenses3 | 7.17 | % | ||
| Adviser expense reimbursement4 | (3.66 | )% | ||
| Net expenses3 | 3.51 | % | ||
| Total return5,6 | 15.60 | % | ||
| Portfolio turnover rate7 | — | % | ||
| Senior Securities: | ||||
| Total borrowings (000s) | $ | — | ||
| Asset coverage per $1,000 unit of senior indebtedness8 | N/A | |||
| * | The Fund commenced operations on September 11, 2023. See Note 1 in the accompanying notes to consolidated financial statements. |
| 1 | Per share data calculated using average shares outstanding during the period. |
| 2 | Net investment income (loss) ratio has been annualized for periods of less than twelve months, except for organizational costs which are one time expenses. |
| 3 | Expense ratios have been annualized for periods of less than twelve months, except for organizational costs. |
| 4 | Expense ratios have been annualized for periods of less than twelve months. |
| 5 | Total return based on net asset value per share reflects the change in the net asset value based on the effects of the performance of the Fund during the period and assume distributions, if any, were reinvested. Total return shown excludes the effect of applicable sales charges. |
| 6 | Total return would have been lower had certain expenses not been waived and assumed by the Adviser during periods of reimbursement. |
| 7 | Represents lesser of purchases or sales of investments for the period divided by the average monthly fair value of investments during the period. Result is not annualized. |
| 8 | Calculated by subtracting the Fund’s total liabilities (not including borrowings) from the Fund’s total assets and dividing this by the total number of senior indebtedness units, where one unit equals $1,000 of senior indebtedness. |
The accompanying notes are an integral part of these consolidated financial statements
16
StepStone Private Infrastructure Fund
Notes to Consolidated Financial Statements
March 31, 2024
1. Organization
StepStone Private Infrastructure Fund (“Fund”) was organized as a Delaware statutory trust under the Delaware Statutory Trust Act on December 2, 2022 (“Inception”) and is registered under the Investment Company Act of 1940, as amended, (“1940 Act”) as a non-diversified, closed-end management investment company that is operated as an interval fund. The Fund is offered to investors who are accredited investors within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended. The Fund commenced operations on September 11, 2023 (“Commencement of Operations”).
The Fund offers Class I Shares, Class D Shares, Class S Shares and Class T Shares (together, “Shares”) to eligible investors (“Shareholders”). The Shares are offered in a continuous registered public offering with subscriptions accepted on a daily basis at the then-current-daily net asset value (“NAV”) per share, adjusted for sales load, if applicable. The Fund intends to conduct quarterly offers to repurchase a minimum of 5.00% and up to a maximum of 25.00% of outstanding Shares at NAV, pursuant to Rule 23c-3 under the 1940 Act, unless such offer is suspended or postponed in accordance with regulatory requirements. The offer to repurchase Shares is a fundamental policy that may not be changed without the vote of the holders of a majority of the Fund’s outstanding voting Shares as defined in the 1940 Act.
The Board provides broad oversight over the Fund’s investment program, management and operations and has the right to delegate management responsibilities. StepStone Group Private Wealth LLC serves as the Fund’s investment adviser (“Adviser”). The Adviser oversees the management of the Fund’s day-to-day activities including structuring, governance, distribution, reporting and oversight. StepStone Group Real Assets LP (“StepStone”) serves as the Fund’s investment sub-adviser (“Sub-Adviser”) and is responsible for the day-to-day management of the Fund’s assets.
The Fund’s investment objective is to achieve long-term capital appreciation and provide current income by offering investors access to a global investment portfolio of private infrastructure assets and, in select cases, investments in other private market asset classes, including but not limited to real estate, private equity and private debt (together, “Private Market Assets”).
2. Summary of Significant Accounting Policies
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars which is the functional currency of the Fund. The Fund is an investment company and therefore applies the accounting and reporting guidance issued by the Financial Accounting Standards Board (“FASB”) in Accounting Standards Codification (“ASC”) 946, Financial Services — Investment Companies. The following are significant accounting policies which are consistently followed in the preparation of the consolidated financial statements.
Basis of Consolidation
The consolidated financial statements include the accounts of subsidiaries wholly-owned by the Fund: STRUCTURE LLC (Series A and Series B), a Delaware limited liability company, as well as STRUCTURE Cayman LLC, STRUCTURE Cayman II LLC, STRUCTURE Cayman III LLC and STRUCTURE Cayman IV LLC (together, “STRUCTURE Cayman”), which are limited liability companies registered in the Cayman Islands. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Changes in the economic environment, financial markets and any other factors or parameters used in determining these estimates could cause actual results to differ materially.
Net Asset Value Determination
The NAV of the Fund is determined as of the close of business on each business day, or as may be determined from time to time in accordance with policies approved by the Board (each, a “Determination Date”). In determining NAV, the Fund’s investments are valued as of the relevant Determination Date. The NAV of the Fund will equal, unless otherwise noted, the value of the total assets
17
StepStone Private Infrastructure Fund
Notes to Consolidated Financial Statements (continued)
March 31, 2024
2. Summary of Significant Accounting Policies (continued)
of the Fund, less all of its liabilities, including accrued fees and expenses allocated to Shares based on the relative net assets of each class to the total net assets of the Fund, each determined as of the relevant Determination Date.
Valuation of Investments
The Fund’s investments are valued as of each Determination Date at fair value consistent with the principles of ASC 820, Fair Value Measurements (“ASC 820”). The Board has adopted valuation policies and procedures (“Valuation Procedures”) and has appointed the Adviser to manage the valuation process of the Fund. The Adviser utilizes the resources and personnel of the Sub-Adviser and the Fund’s sub-administrator in carrying out its responsibilities. The Board must determine fair value in good faith for all Fund investments and has chosen to designate the Adviser to perform the fair value determinations.
Investments held by the Fund in Private Market Assets include secondary purchases of existing investments in (i) individual operating companies or assets and (ii) private investment funds (“Secondary Investments”), investments in newly established private funds (“Primary Investments”) and investments in the equity and/or debt of operating companies, projects or properties (“Co-Investments”). These types of investments normally do not have readily available market prices and therefore will be fair valued according to the Valuation Procedures at each Determination Date. The Valuation Procedures require evaluation of all relevant information reasonably available to the Adviser at the time the Fund’s investments are valued. Valuations of Private Market Assets are inherently subjective and at any point in time may differ materially from the ultimate value, if any, realized on the investment.
Ordinarily, the fair value of the Fund’s investment in a Secondary Investment or a Primary Investment is based on the net asset value of the investment reported by its investment manager (“Investment Manager”). In determining fair value, the Fund also incorporates public benchmark returns that are relevant to the investment funds under consideration to adjust fair values as of the relevant Determination Date. The public benchmark returns are adjusted for long-term, historical correlations between public and private investment returns and other relevant factors. If the Adviser determines that the most recent net asset value reported by the Investment Manager does not represent fair value or if the Investment Manager fails to report a net asset value to the Fund, a fair value determination is made by the Adviser in accordance with the Valuation Procedures. In making that determination, the Adviser will consider whether it is appropriate, in light of all relevant circumstances, to value such investment at the net asset value last reported by its Investment Manager, or whether to adjust such net asset value to reflect a premium or discount (adjusted net asset value). The net asset values or adjusted net asset values are net of management fees and performance/incentive fees (carried interest) payable pursuant to the respective organizational documents of the investment.
In assessing the fair value of the Fund’s Co-Investments in accordance with the Valuation Procedures, the Adviser uses a variety of methods such as earnings and multiple analysis, discounted cash flow analysis and market data from third party pricing services. The Adviser takes into account the following factors in determining the fair value of a Co-Investment: latest round of financing, company operating performance, market-based multiples, potential merger and acquisition activity and any other material information that may impact investment fair value.
In certain circumstances, the Adviser may determine that cost best approximates the fair value of a particular Private Market Asset. The Fund will generally value its investments that are traded or dealt in upon one or more securities exchanges and for which market quotations are readily available at the last quoted sales price on the primary exchange, or at the mean between the current bid and ask prices on the primary exchange, as of the Determination Date.
The Sub-Adviser and one or more of its affiliates acts as investment adviser to clients other than the Fund. However, the value attributed to a Private Market Asset held by the Fund and the value attributed to the same Private Market Asset held by another client of the Sub-Adviser or one of its affiliates might differ as a result of differences in accounting, regulatory, timing and other factors applicable to the Fund when compared to such other client.
Short-term investments are highly liquid instruments with low risk of loss and recorded at NAV per share, which approximates fair value.
Foreign Currency Translation
The books and records of the Fund are maintained in U.S. dollars. The value of investments, assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars based upon current foreign exchange rates on the Determination Date. Purchases and sales of foreign investments, income and expenses are converted into U.S. dollars based on currency exchange rates prevailing on the date of the relevant transaction. The Fund does not isolate the net realized and unrealized gain or loss resulting from changes in exchange rates from fluctuations in the fair value of investments. Such fluctuations are included within the net realized gain distributions from investments and the net change in unrealized appreciation (depreciation) on investments in the Consolidated Statement of Operations. As of March 31, 2024, the Fund held seven Secondary Investments denominated in foreign currencies.
18
StepStone Private Infrastructure Fund
Notes to Consolidated Financial Statements (continued)
March 31, 2024
2. Summary of Significant Accounting Policies (continued)
Realized Gains on Investments, Interest Income and Dividend Income
Distributions received from Secondary Investments, Primary Investments and Co-Investments occur at irregular intervals and the exact timing of the distributions cannot be determined. The classification of distributions received in cash or in-kind, including return of capital, realized gains, interest income and dividend income, is based on information received from the Investment Manager of the Secondary Investments, Primary Investments or Co-Investments. Dividend income and interest income are recorded on a trade date and accrual basis.
Fund Expenses
The Fund bears all expenses incurred in the course of its operations including, but not limited to, the following: all fees and expenses of the Private Market Assets in which the Fund invests (“Acquired Fund Fees”), management fees, fees and expenses associated with a credit facility, legal fees, administrator fees, audit and tax preparation fees, custodial fees, transfer agency fees, registration expenses, expenses of the Board and other administrative expenses. Certain of these operating expenses are subject to an expense limitation agreement (“Expense Limitation and Reimbursement Agreement” as further discussed in Note 4). Expenses are recorded on an accrual basis and allocated pro-rata to Shares based upon prior day net assets at each Determination Date. Class-specific expenses are allocated only to their respective share class (see Note 6). Closing costs associated with the purchase of Secondary Investments, Primary Investments and Co-Investments are included in the cost of the investment.
Federal Income Taxes
For U.S. federal income tax purposes, the Fund has elected to be treated, and intends to qualify annually, as a Regulated Investment Company (“RIC”) under Subchapter M of the Internal Revenue Code by distributing substantially all of its taxable net investment income and net realized capital gains to Shareholders each year and by meeting certain diversification and income requirements with respect to investments. If the Fund were to fail to meet the requirements to qualify as a RIC, and if the Fund were ineligible to or otherwise unable to cure such failure, the Fund would be subject to tax on its taxable income at corporate rates, whether or not distributed to Shareholders, and all distributions of earnings and profits would be taxable to Shareholders as ordinary income.
The Fund’s tax year is the 12-month period ending September 30. The Fund files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Fund is subject to examination by federal, state, local and foreign jurisdictions, where applicable. As of March 31, 2024, the 2023 tax year is subject to examination by the major tax jurisdictions under the statute of limitations.
Distributions are determined in accordance with federal income tax regulations, which may differ from net investment income and net realized capital gains for financial statement purposes under U.S. GAAP. Differences may be permanent or temporary. Permanent differences, including book/tax differences relating to Shareholder distributions, are reclassified among capital accounts in the consolidated financial statements to reflect the applicable tax characterization. Temporary differences arise when certain items of income, expense, gain or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse in the future. The tax basis components of distributable earnings differ from the amounts reflected in the Consolidated Statement of Assets and Liabilities and Consolidated Statement of Operations due to temporary book/tax differences. These amounts will be finalized before filing the Fund’s federal tax return.
STRUCTURE LLC, a wholly-owned subsidiary of the Fund, is a domestic limited liability company that has elected to be treated as a C-corporation for federal and state income tax purposes and is required to account for its estimate of income taxes through the establishment of a deferred tax asset or liability. The Fund recognizes deferred income taxes for temporary differences in the basis of assets and liabilities for financial and income tax purposes. Deferred tax assets are recognized for deductible temporary differences, tax credit carryforwards or net operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. To the extent STRUCTURE LLC has a deferred tax asset, consideration is given to whether a valuation allowance is required.
The STRUCTURE Cayman subsidiaries, wholly-owned by the Fund, are not subject to U.S. federal and state income taxes and are treated as entities disregarded as separate from their sole owner, the Fund, for U.S. federal income tax purposes.
Organizational and Offering Costs
During the period from Inception through the Commencement of Operations, the Fund incurred organizational costs of $0.2 million. The organizational costs paid by the Adviser will be reimbursed by the Fund in accordance with the Expense Limitation and Reimbursement Agreement. Organizational costs consist primarily of costs to establish the Fund and enable it to legally conduct business.
19
StepStone Private Infrastructure Fund
Notes to Consolidated Financial Statements (continued)
March 31, 2024
2. Summary of Significant Accounting Policies (continued)
During the period from Inception through the Commencement of Operations, the Fund incurred offering costs of $0.5 million. Offering costs are treated as deferred charges and, upon Commencement of Operations, amortized over a 12-month period using the straight-line method. During the period September 11, 2023 to March 31, 2024, the Fund amortized offering costs of $0.3 million which is included in the Consolidated Statement of Operations. Offering costs paid by the Adviser will be reimbursed by the Fund in accordance with the Expense Limitation and Reimbursement Agreement. Offering costs consist primarily of legal fees, filing fees and printing costs in connection with the preparation of the registration statement and related filings. The Fund will continue to incur offering costs due to its continuously offered status. Ongoing offering costs will be expensed as incurred.
Cash and Cash Equivalents
Cash and cash equivalents include monies on deposit with UMB Bank N.A. (“UMB Bank”), the Fund’s custodian, and investments in UMB Bank demand deposits. Bank demand deposits are short-term interest-bearing accounts to provide liquidity pending investment in Private Market Assets. Deposits, at times, may exceed the insurance limit guaranteed by the Federal Deposit Insurance Corporation. The Fund has not experienced any losses on deposits and does not believe it is exposed to significant credit risk on such deposits. There are no restrictions on the cash held by UMB Bank on the Fund’s behalf.
Recently Adopted Regulatory Matters
In June 2022, the FASB issued Accounting Standard Update No. 2022-03, Fair Value Measurement (ASC 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). The primary purpose of the amendments within ASU 2022-03 is to clarify the guidance in ASC 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction. The amendments in ASU 2022-03 (1) prohibit taking into account contractual restrictions on the sale of an equity security when estimating its fair value and (2) require disclosure of any restrictions on the sale of an equity investment. The amendments in ASU 2022-03 are effective for public business entities beginning after December 15, 2023. There was no material impact on investment valuations as a result of the adoption of this guidance.
In December 2023, the FASB issued Accounting Standard Update No. 2023-09, Income Taxes (ASC 740) Improvements to Income Tax Disclosures (“ASU 2023-09”). The primary purpose of the amendments within ASU 2023-09 is to enhance the transparency and decision usefulness of income tax disclosures primarily related to the rate reconciliation table and income taxes paid information. The amendments in ASU 2023-09 require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. In addition, the amendments in this ASU 2023-09 require that all entities disclose on an annual basis taxes paid disaggregated by; federal, state, foreign, and jurisdiction (when income taxes paid is equal to or greater than five percent of total income taxes paid). The amendments in ASU 2023-09 are effective for public business entities beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments in ASU 2023-09 should be applied on a prospective basis. Retrospective application is permitted. Management is currently assessing the impact this standard will have on our consolidated financial statements as well as the method by which we will adopt the new standard. The Adviser does not expect the guidance to have a material impact to the Fund.
3. Fair Value Measurements
U.S. GAAP, ASC 820, defines fair value as the value that the Fund would receive to sell an investment or pay to transfer a liability in an orderly transaction with an independent buyer in the principal market, or in the absence of a principal market, the most advantageous market for the asset or liability. ASC 820 establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Fund’s own assumptions about the assumptions that market participants would use in valuing the asset or liability developed based on the best information available in the circumstances. Each investment is assigned a level based upon the observation of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below:
Level 1: Quoted prices are available in active markets for identical investments as of the reporting date. The types of investments which would generally be included in Level 1 include listed equities, registered money market funds and short-term investment vehicles.
20
StepStone Private Infrastructure Fund
Notes to Consolidated Financial Statements (continued)
March 31, 2024
3. Fair Value Measurements (continued)
Level 2: Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. The types of investments which would generally be included in Level 2 include corporate bonds and loans and less liquid and restricted equity securities.
Level 3: Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment and/or estimation. Those unobservable inputs, that are not corroborated by market data, generally reflect the reporting entity’s own assumptions about the assumptions market participants would use in determining the fair value of the investment. The types of investments which would generally be included in Level 3 are equity and/or debt securities issued by private entities.
In accordance with ASC 820, certain portfolio investments fair valued using net asset value or adjusted net asset value (or its equivalent), adjusted for cash flows, as a practical expedient are not included in the fair value hierarchy. As such, investments in securities with a fair value of $36.6 million are excluded from the fair value hierarchy as of March 31, 2024.
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities. The following is a summary of the Fund’s investments classified by fair value hierarchy as of March 31, 2024:
| Level 1 | Level 2 | Level 3 | Investments Valued at NAV or Adjusted NAV | Total | ||||||||||||||||
| Secondary Investments | $ | — | $ | — | $ | — | $ | 36,596,735 | $ | 36,596,735 | ||||||||||
| Short-Term Investments | 10,103,322 | — | — | — | 10,103,322 | |||||||||||||||
| Total Investments | $ | 10,103,322 | $ | — | $ | — | $ | 36,596,735 | $ | 46,700,057 | ||||||||||
Changes in inputs or methodologies used for valuing investments, including timing of reported net asset values of Secondary Investments reported by their Investment Managers, may result in transfers in or out of levels within the fair value hierarchy. The inputs or methodologies used for valuing investments may not necessarily be indicative of the risk associated with investing in those investments. Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur.
A listing of the Private Market Assets types held by the Fund and the related attributes, as of March 31, 2024, are shown in the table below:
| Investment Type | Investment Strategy | Fair Value | Unfunded Commitment | |||||||
| Secondary Investments | Investments in existing private investment funds or operating companies that are typically acquired in privately negotiated transactions | $ | 36,596,735 | $ | 6,416,803 | |||||
4. Investment Adviser and Transactions with Affiliates
In consideration of its services to the Fund, the Adviser is entitled to a management fee (“Management Fee”) equal to 1.60% on an annualized basis of the Fund’s daily net assets. The Management Fee is accrued daily and payable monthly in arrears. The Adviser pays the Sub-Adviser 50% of the Management Fee. For the period September 11, 2023 through March 31, 2024, the Adviser earned $0.5 million in Management Fees of which $0.1 million was payable as of March 31, 2024.
The Adviser has entered into an Expense Limitation and Reimbursement Agreement with the Fund for a one-year term beginning with the Commencement of Operations and ending on the one-year anniversary thereof on September 10, 2024 (“Limitation Period”). The Adviser may extend the Limitation Period for a period of one year on an annual basis. The Expense Limitation and Reimbursement Agreement limits the amount of the Fund’s aggregate ordinary operating expenses, excluding certain specified expenses (“Specified Expenses”), borne by the Fund during the Limitation Period to an amount not to exceed 1.00% for Class I, D, S and T Shares, on an annualized basis, of the Fund’s daily net assets (“Expense Cap”). Specified Expenses that are not covered by the
21
StepStone Private Infrastructure Fund
Notes to Consolidated Financial Statements (continued)
March 31, 2024
4. Investment Adviser and Transactions with Affiliates (continued)
Expense Limitation and Reimbursement Agreement include: (i) the Management Fee; (ii) Acquired Fund Fees; (iii) transactional costs, including legal costs and brokerage commissions, associated with the acquisition and disposition of Private Market Assets and other investments; (iv) interest payments incurred on borrowing by the Fund; (v) fees and expenses incurred in connection with a credit facility, if any, obtained by the Fund; (vi) distribution and shareholder servicing fees, as applicable; (vii) taxes; and (viii) extraordinary expenses resulting from events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence.
If the Fund’s aggregate ordinary operating expenses, in respect of any class of Shares, exceeds the Expense Cap applicable to that class of Shares, the Adviser will waive its Management Fee and/or reimburse the Fund for expenses to the extent necessary to eliminate such excess. The Adviser may also directly pay expenses on behalf of the Fund and waive reimbursement under the Expense Limitation and Reimbursement Agreement. To the extent that the Adviser waives its Management Fee, reimburses expenses to the Fund or pays expenses directly on behalf of the Fund, it is permitted to recoup from the Fund any such amounts for a period not to exceed three years from the month in which such fees and expenses were waived, reimbursed, or paid, even if such recoupment occurs after the termination of the Limitation Period. However, the Adviser may only recoup the waived fees, reimbursed expenses or directly paid expenses in respect of the applicable class of Shares if the ordinary operating expenses have fallen to a level below the relevant Expense Cap and the recouped amount does not raise the level of ordinary operating expenses in respect of a class of Shares in the month of recoupment to a level that exceeds any Expense Cap applicable at that time.
For the period from Inception through March 31, 2024, expenses in excess of the Expense Cap subject to recoupment under the Expense Limitation and Reimbursement Agreement combined for all share classes were $1.1 million. The Consolidated Statement of Assets and Liabilities includes a Due to Adviser of $0.3 million as of March 31, 2024 for the net of expenses paid by the Adviser and expenses in excess of the Expense Cap.
The Adviser serves as the Fund’s administrator (“Administrator”) pursuant to an administration agreement (“Administration Agreement”) under which the Administrator provides administrative, accounting and other services. Pursuant to the Administration Agreement, the Fund pays the Administrator an administration fee (“Administration Fee”) in an amount up to 0.23% on an annualized basis of the Fund’s net assets. The Administration Fee is accrued daily based on the value of the prior day net assets of the Fund as of the close of business on each business day (including any assets in respect of Shares that will be repurchased by the Fund on such date), payable monthly in arrears. For the period September 11, 2023 through March 31, 2024, the Administrator earned $0.1 million in Administration Fees of which $15,982 was payable as of March 31, 2024.
5. Sub-Administrator, Custodian and Transfer Agent
From the proceeds of the Administration Fee, the Administrator pays UMB Fund Services, Inc. (“Sub-Administrator”) a sub-administration fee to perform certain administrative and accounting services for the Fund on behalf of the Administrator. The sub- administration fee, pursuant to a sub-administration agreement and a fund accounting agreement, is paid monthly by the Administrator and is based on the value of the net assets of the Fund as of the close of business on each business day, subject to an annual minimum.
UMB Bank serves as the Fund’s custodian (“Custodian”) pursuant to a custody agreement. As the Custodian, UMB Bank holds the Fund’s domestic assets. Foreign assets are held by sub-custodians. For the period September 11, 2023 through March 31, 2024, the Custodian earned $26,055 in custody fees of which $7,535 was payable as of March 31, 2024.
UMB Fund Services, Inc. serves as the Fund’s transfer agent (“Transfer Agent”) pursuant to a transfer agency agreement. The Transfer Agent, among other things, receives and processes purchase orders, effects issuance of Shares, prepares and transmits payments for distributions, receives and processes repurchase offers and maintains records of account. For the period September 11, 2023 through March 31, 2024, the Transfer Agent earned $0.1 million in transfer agent fees of which $39,963 was payable as of March 31, 2024.
6. Distribution and Shareholder Servicing Plan
UMB Distribution Services, LLC serves as the Fund’s distributor (“Distributor”) pursuant to a distribution agreement. The Distributor distributes the Shares of the Fund, in compliance with Rule 12b-1 under the Investment Company Act. The Distributor is authorized to enter into Sub-Distribution Agreements with brokers, dealers and certain RIAs and other financial intermediaries to effect the distribution of Shares of the Fund. The Fund pays a distribution and shareholder servicing fee out of the net assets of Class S Shares and Class T Shares at the annual rate of 0.85% of the aggregate NAV of each Class S Shares and Class T Shares. The Fund pays a shareholder servicing fee out of the net assets of Class D Shares at the annual rate of 0.25% of the aggregate NAV of Class D Shares. Distribution and shareholder servicing fees are determined and accrued daily based on the net assets of the Share Class as of the close of business on each business day (including net assets in respect of Shares that will be repurchased by the Fund on such date).
22
StepStone Private Infrastructure Fund
Notes to Consolidated Financial Statements (continued)
March 31, 2024
6. Distribution and Shareholder Servicing Plan (continued)
Class I Shares are not subject to a distribution and shareholder servicing fee. For the period September 11, 2023 through March 31, 2024, no distribution or shareholder servicing fees were incurred.
7. Revolving Credit Facility
Effective September 7, 2023, the Fund entered into a revolving credit agreement (“Credit Facility”), as amended from time to time, with Texas Capital Bank allowing the Fund to borrow up to $50.0 million (“Commitment”) from a syndicate of lenders. The purpose of the Credit Facility is to provide short-term working capital, primarily to bridge the timing of the Fund’s acquisition of Private Market Assets in advance of the receipt of investor subscriptions. Borrowings on the Credit Facility are collateralized by all assets of the Fund. The Commitment termination date is September 5, 2025.
When borrowing on the Credit Facility, the Fund can select a “Base Rate Borrowing” or “Term SOFR Borrowing” (each a “Loan Type”). The interest rate associated with each Loan Type will be determined at the time of such borrowing and is comprised of a reference rate plus an applicable margin of 2.50% for Base Rate Borrowings or 3.50% for Term SOFR Borrowings. The average interest rate on short-term borrowings during the period September 11, 2023 through March 31, 2024 was 8.94%. The Credit Facility has an unused fee of 0.40% per annum on the average daily unused balance when the current outstanding balance equals or exceeds 25% of the maximum principal amount available and 0.60% per annum otherwise. In conjunction with the Credit Facility, the Fund incurred an upfront fee of 0.40% which is being amortized in the Consolidated Statement of Operations over the two-year term of the Credit Facility. For the period September 11, 2023 through March 31, 2024, expenses incurred by the Fund related to the Credit Facility were $0.3 million. The average daily short-term borrowings outstanding during the period September 11, 2023 through March 31, 2024 were $0.7 million.
The following table provides a summary of the key characteristics of the Credit Facility as of March 31, 2024:
| Current Balance (in millions) | $ | — | ||
| Maximum Principal Amount Available (in millions) | $ | 50.0 | ||
| Inception Date | September 7, 2023 | |||
| Maturity Date | September 5, 2025 | |||
| Unused Fee1 | 0.40% - 0.60% per annum |
1 The Fund is charged a fee on the daily average unused amount of the Credit Facility.
8. Commitments and Contingencies
As of March 31, 2024, the Fund has contractual unfunded commitments to provide additional funding of $6.4 million to certain investments. The commitments to investments are subject to certain terms and conditions prior to closing of the relevant transactions. There can be no assurance that such transactions will close as expected or at all.
ASC 460-10, Guarantees - Overall, requires entities to provide disclosure and, in certain circumstances, recognition of guarantees and indemnifications. In the normal course of business, the Fund enters into contracts that contain a variety of indemnification arrangements. The Fund’s exposure under these arrangements, if any, cannot be quantified. However, the Fund has not had claims or losses pursuant to these indemnification arrangements and expects the potential for a material loss to be remote.
9. Capital Share Transactions
The Fund offers four separate classes of shares of beneficial interest designated as Class I Shares, Class D Shares, Class S Shares and Class T Shares. Each class of Shares is subject to different fees and expenses.
The minimum initial investment in Class I Shares by an investor in the Fund is $1.0 million. The minimum initial investment for Class I may be reduced at the Adviser’s discretion. The minimum initial investment in Class D Shares, Class S Shares and Class T Shares by an investor is $25,000. Investors purchasing Class S Shares and Class T Shares may be charged a sales load up to a maximum of 3.50%. Investors purchasing Class I Shares and Class D Shares are not charged a sales load. The Fund accepts initial and additional purchases of Shares daily at the Fund’s then-current NAV per share (determined as of the prior day close of business).
23
StepStone Private Infrastructure Fund
Notes to Consolidated Financial Statements (continued)
March 31, 2024
9. Capital Share Transactions (continued)
The following table summarizes the Capital Share transactions for the period September 11, 2023 through March 31, 2024:
| For the Period Ended March 31, 2024* | ||||||||
| Shares | Dollar Amounts | |||||||
| Class I | ||||||||
| Proceeds from shares issued | 7,441,164 | $ | 81,456,532 | |||||
| Reinvestment of distributions | — | — | ||||||
| Repurchase of shares | (75,514 | ) | (874,449 | ) | ||||
| Exchange of shares | — | — | ||||||
| Net increase | 7,365,650 | $ | 80,582,083 | |||||
| Class D | ||||||||
| Proceeds from shares issued | 1,000 | $ | 10,000 | |||||
| Reinvestment of distributions | — | — | ||||||
| Repurchase of shares | — | — | ||||||
| Exchange of shares | — | — | ||||||
| Net increase | 1,000 | $ | 10,000 | |||||
| Class S | ||||||||
| Proceeds from shares issued | 1,000 | $ | 10,000 | |||||
| Reinvestment of distributions | — | — | ||||||
| Repurchase of shares | — | — | ||||||
| Exchange of shares | — | — | ||||||
| Net increase | 1,000 | $ | 10,000 | |||||
| Class T | ||||||||
| Proceeds from shares issued | 1,000 | $ | 10,000 | |||||
| Reinvestment of distributions | — | — | ||||||
| Repurchase of shares | — | — | ||||||
| Exchange of shares | — | — | ||||||
| Net increase | 1,000 | $ | 10,000 | |||||
* The Fund commenced operations on September 11, 2023.
Beginning December 2023, the Fund will conduct quarterly offers to repurchase a minimum of 5.00% and up to a maximum of 25.00% of the outstanding Shares at NAV, unless such offer is suspended or postponed in accordance with regulatory requirements (as discussed in Note 1). No Shareholder will have the right to require the Fund to repurchase such Shareholder’s Shares or any portion thereof. In the event that Shareholders, in the aggregate, submit for repurchase more than the number of Shares that the Fund will offer to repurchase, the Fund may repurchase the Shares on a pro rata basis, which may result in the Fund not honoring the full amount of a Share repurchase requested by a Shareholder. In connection with any given quarterly repurchase offer, the Fund currently intends to repurchase 5.00% of its outstanding Shares.
10. Dividend Reinvestment Plan
Pursuant to the dividend reinvestment plan (“DRIP”) established by the Fund, each Shareholder whose Shares are registered in its own name will automatically be a participant under the DRIP and all income and/or capital gain dividend distributions will automatically be reinvested in additional Shares unless such Shareholder specifically elects to receive all income and/or capital gain dividends in cash. A Shareholder is free to change this election at any time. If, however, a Shareholder requests to change its election within 30 days prior to a distribution, the request will be effective only with respect to distributions after the 30-day period.
24
StepStone Private Infrastructure Fund
Notes to Consolidated Financial Statements (continued)
March 31, 2024
11. Investment Transactions
For the period September 11, 2023 through March 31, 2024, purchases of Secondary Investments totaled $32.4 million. For the period September 11, 2023 through March 31, 2024, total proceeds received from investments that represented return of capital distributions were $0.4 million.
12. Tax Information
The Fund has temporary differences primarily due to timing of the amortization of organizational and offering costs and differences between book and tax treatment of partnership and passive foreign investment company investments.
As of September 30, 2023, the Fund had a permanent book to tax difference of $26,331 resulting from net operating losses. This permanent book to tax difference has been reclassified to paid-in capital and has no effect on the net assets or net asset value per share of the Fund.
For the tax year ended September 30, 2023, the Fund’s tax components of distributable earnings on a tax basis are as follows:
| Undistributed ordinary income | $ | — | ||
| Accumulated capital and other losses | — | |||
| Undistributed long-term capital gains | — | |||
| Amortization of organizational costs | — | |||
| Net tax appreciation (depreciation) | 1,101,801 | |||
| Total distributable earnings | $ | 1,101,801 |
The Fund made no Subchapter M distributions for the fiscal year ended 2024 as there were no taxable net investment income or capital gains.
As of September 30, 2023, the Fund had no qualified late year losses.
As of March 31, 2024, the federal tax cost of investments and unrealized appreciation (depreciation) are as follows:
| Gross unrealized appreciation | $ | 4,833,215 | ||
| Gross unrealized depreciation | (223,609 | ) | ||
| Net unrealized appreciation (depreciation) on investments | $ | 4,609,606 | ||
| Tax cost of investments | $ | 42,090,451 |
STRUCTURE LLC did not record a provision for income tax expense for the period September 11, 2023 through March 31, 2024 as the subsidiary did not recognize net investment income or realized and unrealized gains (losses) on investments during the period.
In accounting for income taxes, the Fund follows the guidance in ASC 740, Accounting for Uncertainty in Income Taxes (“ASC 740”). ASC 740 prescribes the minimum recognition threshold a tax position must meet in connection with accounting for uncertainties in income tax positions taken or expected to be taken by an entity before being measured and recognized in the consolidated financial statements. Management has concluded there were no uncertain tax positions as of March 31, 2024 for federal income tax purposes or in the Fund’s state and local tax jurisdictions. The Fund will recognize interest and penalties, if any, related to unrecognized tax benefits as tax expense in the Consolidated Statement of Operations. For the period September 11, 2023 through March 31, 2024, the Fund did not incur any interest or penalties. The Fund did not have any unrecognized tax benefits as of March 31, 2024.
13. Risk Factors
An investment in the Fund involves material risks, including performance risk, liquidity risk, business and financial risk, risks associated with the use of leverage, valuation risk, tax risk and other risks that should be carefully considered prior to investing and investing should only be considered by persons financially able to maintain their investment and who can afford a loss of a substantial part or all of such investment.
25
StepStone Private Infrastructure Fund
Notes to Consolidated Financial Statements (continued)
March 31, 2024
14. Activities Prior to Commencement of Operations
The Fund prepared its seed financial statements for the period from Inception to June 16, 2023. During the period from June 17, 2023 through the Commencement of Operations, the Fund engaged in various activities in preparation for the offering of Shares and incurred further costs in relation to the offering, including various legal expenses and printing costs as disclosed in Note 2.
15. Subsequent Events
On May 10, 2024, the Fund commenced a repurchase offer with a valuation date of June 14, 2024.
Effective May 11, 2024, Harold Mills resigned as an Independent Trustee. On May 23, 2024, the Board appointed Terry W. Prather as an Independent Trustee of the Fund.
The Fund has adopted financial reporting rules regarding subsequent events which require an entity to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet. The Adviser has evaluated the Fund’s related events and transactions that occurred through the date of issuance of the Fund’s financial statements. There were no other events or transactions that occurred during this period that materially impacted the amounts or disclosures in the Fund’s consolidated financial statements or the accompanying notes.
26
StepStone Private Infrastructure Fund
Trustees and Officers (unaudited)
March 31, 2024
The identity of the Trustees and executive officers of the Fund and brief biographical information regarding each such person during the past five years is set forth below. The Fund’s Statement of Additional Information includes additional information about the membership of the Board and is available, without charge, upon request, by calling the Fund toll-free at (704) 215-4300.
| Independent Trustees | |||||
| Name, Address and Birth Year | Position(s) Held with Registrant | Length of Time Served1 | Principal Occupation(s) During Past Five Years | Number of Portfolios Overseen in Fund Complex | Other Trusteeships/ Directorships Held Outside the Fund Complex2 |
| Harold Mills c/o StepStone Group Private Wealth LLC 128 S Tryon St., Suite 1600 Charlotte, NC 28202 Birth Year: 1970 | Trustee | Indefinite Length - Since Inception | CEO, VMD Ventures (Since 2016); CEO, ZeroChaos (2000 – 2017) | 4 | None |
| Tracy Schmidt c/o StepStone Group Private Wealth LLC 128 S Tryon St., Suite 1600 Charlotte, NC 28202 Birth Year: 1957 | Trustee | Indefinite Length - Since Inception | Founder, Morning Star Advisory, LLC (consulting and advisory services) (Since 2018) | 4 | None |
| Ron Sturzenegger c/o StepStone Group Private Wealth LLC 128 S Tryon St., Suite 1600 Charlotte, NC 28202 Birth Year: 1960 | Trustee | Indefinite Length - Since Inception | None | 4 | Director, KBS Real Estate Investment Trust II, Inc. and KBS Real Estate Investment Trust III, Inc. (Since 2019) |
| Interested Trustees | |||||
| Name, Address and Birth Year | Position(s) Held with Registrant | Length of Time Served1 | Principal Occupation(s) During Past Five Years | Number of Portfolios Overseen in Fund Complex | Other Trusteeships/ Directorships Held Outside the Fund Complex2 |
| Tom Sittema c/o StepStone Group Private Wealth LLC 128 S Tryon St., Suite 1600 Charlotte, NC 28202 Birth Year: 1958 | Chairperson of the Board of Trustees | Indefinite Length - Since Inception | Executive Chairman, StepStone Group Private Wealth LLC (Since 2020) | 4 | None |
| Bob Long c/o StepStone Group Private Wealth LLC 128 S Tryon St., Suite 1600 Charlotte, NC 28202 Birth Year: 1962 | Trustee | Indefinite Length - Since Inception | CEO, StepStone Group Private Wealth LLC (Since 2019) | 4 | None |
27
StepStone Private Infrastructure Fund
Trustees and Officers (unaudited) (continued)
March 31, 2024
| Executive Officers | |||
| Name, Address and Birth Year | Position(s) Held with Registrant | Length of Time Served1 | Principal Occupation(s) During Past Five Years |
| Bob Long c/o StepStone Group Private Wealth LLC 128 S Tryon St., Suite 1600 Charlotte, NC 28202 Birth Year: 1962 | President and Principal Executive Officer | Indefinite Length - Since Inception | See above |
| Kimberly Zeitvogel c/o StepStone Group Private Wealth LLC 128 S Tryon St., Suite 1600 Charlotte, NC 28202 Birth Year: 1971 | Treasurer and Principal Financial Officer | Indefinite Length – Since January 2023 | Partner, StepStone Group Private Wealth LLC (Since 2020); Vice President of Finance, Millennium Advisors, LLC (2018 – 2020) |
| Tim Smith c/o StepStone Group Private Wealth LLC 128 S Tryon St., Suite 1600 Charlotte, NC 28202 Birth Year: 1968 | Vice President | Indefinite Length – Since November 2023 | CFO and COO, StepStone Group Private Wealth LLC (Since 2019); President, Carolon Capital (Since 2013) |
| Chris Ancona c/o StepStone Group Private Wealth LLC 128 S Tryon St., Suite 1600 Charlotte, NC 28202 Birth Year: 1971 | Chief Compliance Officer | Indefinite Length — Since July 2022 | Deputy CCO, StepStone (Since 2021); CCO and Counsel, Greenspring Associates (2019 – 2021); CCO, Man Numeric (2017 – 2019) |
1Each Trustee or Officer serves an indefinite term, until his or her successor is elected.
2This includes any directorships at public companies and registered investment companies held by the Trustee over the past five years.
28
StepStone Private Infrastructure Fund
Other Information (unaudited)
March 31, 2024
Proxy Voting Policies and Procedures
A description of the Fund’s proxy voting policies and procedures related to portfolio securities is available without charge, upon request, by calling the Fund at (704) 215-4300 or on the U.S. Securities and Exchange Commission’s (“SEC”) website at sec.gov.
Proxy Voting Record
Information regarding how the Fund voted proxies for portfolio securities, if applicable, during the most recent 12-month period ended June 30, is also available, without charge and upon request by calling the Fund (888) 882-8212 or by accessing the Fund’s Form N-PX on the SEC’s website at sec.gov.
Availability of Quarterly Portfolio Schedules
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. The Fund’s Form N-PORT is available on the SEC website at sec.gov. or without charge and upon request by calling the Fund at (704) 215-4300.
29
StepStone Private Infrastructure Fund
Privacy Notice (unaudited)
March 31, 2024
Policy Statement:
The Board has approved the following policies and procedures (the “Data Privacy Policy”) with respect to nonpublic personal information about its customers.
The Fund collects nonpublic personal information about its customers1 from the following sources:
| • | account applications and other forms, which may include a customer’s name, address, social security number, and information about a customer’s investment goals and risk tolerance; |
| • | account history, including information about the transactions and balances in a customer’s account; and |
| • | correspondence, written, or telephonic, between a customer and the Fund or service providers to the Fund. |
In addition, the Fund may obtain consumer information about its customers from consumer reports.
The Fund will not release nonpublic personal or consumer information about its customers or their accounts unless one of the following conditions is met:
| • | Prior written consent is received; |
| • | The Fund believes the recipient to be the customer of the Fund or such Fund customer’s authorized representative; or |
| • | The Fund is required by law to release information to the recipient. |
The Fund does not give or sell nonpublic personal or consumer information about its customers or their fund accounts to any other company, individual, or group.
The Fund will only use nonpublic personal or consumer information about its customers and their accounts to attempt to better serve their investment needs or to suggest services or educational materials that may be of interest to them.
The Fund restricts access to nonpublic personal and consumer information about customers to those employees who need to know that information in order to provide products or services. The Fund may also share personal information with companies that it hires to provide support services. When the Fund or its Transfer Agent shares nonpublic personal or consumer information with other service providers, it protects that information with a strict confidentiality agreement. The Fund also maintains reasonable physical, electronic and procedural safeguards that comply with federal standards to protect against unauthorized access to and properly dispose of customers’ nonpublic personal and consumer information.
The Fund will adhere to the policies and procedures described in this notice for current and former shareholders of the Fund.
II. Physical, Electronic and Procedural Safeguards
The following includes a list of the primary physical, electronic and procedural safeguards employed by the Transfer Agent to ensure against unauthorized access and proper disposal of customers’ nonpublic personal and consumer information.
| • | The Fund shall distribute a Data Privacy Policy to shareholder as an appendix to the Prospectus and annually through the Fund’s annual report to shareholders to ensure compliance with shareholder notification requirements mandated by Regulation S-P. |
| • | Should a change in this Data Privacy Policy occur, the Principal Underwriter or Transfer Agent will provide existing customers of the Fund with the updated version of the Data Privacy Policy. |
| • | The Transfer Agent shall maintain policies and procedures to oversee the adequacy of security measures used by any non-affiliated third-parties that do business with the Transfer Agent and to ensure such measures are compliant with the requirements under Regulation S-P. Appropriate confidentiality language must exist in the contractual arrangements with each of these relationships. |
| • | The Transfer Agent, the Administrator, the Fund Accounting Agent, the Principal Underwriter, and Investment Adviser shall maintain procedures related to the security of nonpublic personal information and consumer information (including physical, electronic and procedural safeguards) and proper disposal of such information. |
| • | Any data privacy related questions, concerns or breaches will be brought to the attention of the Fund’s CCO. |
30
StepStone Private Infrastructure Fund
Privacy Notice (unaudited) (continued)
March 31, 2024
Procedures:
| 1. | The Fund’s CCO will continually monitor applicable regulations that may cause policies of the Fund and/or its service providers subject to the requirements of Regulation S-P to change. |
| 2. | Annually, the Fund’s CCO will review any independent reviews applicable to data security at the Fund’s service providers who have access to or otherwise obtain nonpublic personal information in fulfilling their obligations to the Fund. |
| 3. | Annually, the Fund’s CCO will inquire and review, where applicable, any related data privacy issues reported by the Fund’s service providers who have access to or otherwise obtain nonpublic personal information in fulfilling their obligations to the Fund. |
1For purposes of this Data Privacy Policy, the terms “customer” or “customers” includes both shareholders of the Fund and individuals who provide nonpublic personal information to the Fund, but do not invest in Fund shares.
31
Investment Adviser and Administrator
StepStone Group Private Wealth LLC
128 S Tryon St., Suite 1600
Charlotte, North Carolina 28202
www.stepstonepw.com
Investment Sub-Adviser
StepStone Group Real Assets LP
4225 Executive Square, Suite 1600
La Jolla, California 92037
Custodian
UMB Bank, N.A.
928 Grand Boulevard, 5th Floor
Kansas City, Missouri 64106
Sub-Administrator, Transfer Agent and Sub-Accountant
UMB Fund Services, Inc.
235 W. Galena Street
Milwaukee, Wisconsin 53212-3949
Phone: (414) 299-2200
Distributor
UMB Distribution Services, LLC
235 W. Galena Street
Milwaukee, Wisconsin 53212-3949
Independent Registered Public Accounting Firm
Ernst & Young LLP
One Manhattan West
New York, New York 10001
32
(b) Not applicable.
ITEM 2. CODE OF ETHICS.
(a) StepStone Private Infrastructure Fund (the “Fund” or the “Registrant”), as of the end of the period covered by this report, has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party.
(b) Not applicable.
(c) There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party, and that relates to any element of the code of ethics description.
(d) The Registrant has not granted any waivers, during the period covered by this report, including an implicit waiver, from a provision of the code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item’s instructions.
(e) Not applicable.
(f) The Registrant’s Code of Ethics is attached as Exhibit (a)(1) to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The Registrant’s board of trustees has determined that the Registrant has at least one audit committee financial expert serving on the audit committee.
(a)(2) The audit committee financial expert is Mr. Tracy Schmidt who is independent as defined in Form N-CSR Item 3 (a)(2).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees
(a) The aggregate fees billed for the period ended March 31, 2024 (the Registrant’s first period of operations) for professional services rendered by the principal accountant for the audit of the Registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for each year or period are $0.19 million.
Audit-Related Fees
(b) The aggregate fees billed for the period ended March 31, 2024 (the Registrant’s first period of operations) for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this Item are $0.01 million. Audited-related fees principally includes fees associated with reviewing and providing comments on semi-annual reports and issuing consents.
Tax Fees
(c) The aggregate fees billed for the period ended March 31, 2024 (the Registrant’s first period of operations) for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning are $0.05 million. Tax-related fees principally includes fees associated with the preparation of taxable income calculations and federal income tax forms.
All Other Fees
(d) The aggregate fees billed for the period ended March 31, 2024 (the Registrant’s first period of operations) for products and services provided by the principal accountant other than the services reported in paragraphs (a) through (c) of this Item are $0.
(e)(1) During its regularly scheduled periodic meetings, the Registrant’s audit committee will pre-approve all audit, audit-related, tax and other services to be provided by the principal accountants of the Registrant.
The audit committee may, from time to time, delegate to one or more of its members who are “independent trustees” (as defined in Section 2(a)(19) of the Investment Company Act of 1940 (the “1940 Act”)) pre-approval authority for any subsequent new engagements that arise between regularly scheduled meeting dates provided that any fees that are pre-approved are presented to the audit committee at its next regularly scheduled meeting.
Under applicable laws, pre-approval of non-audit services may be waived provided that: (i) the aggregate amount of all such services provided constitutes no more than five percent of the total amount of fees paid by the Registrant to its principal accountant during the fiscal year in which services are provided; (ii) such services were not recognized by the Registrant at the time of engagement as non-audit services; and (iii) such services are promptly brought to the attention of the audit committee of the Registrant, approved prior to the completion of the audit, and approved based upon a determination that the service is eligible for waiver.
(e)(2) The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
(b) Not applicable.
(c) 0%
(d) Not applicable.
(f) Not applicable.
(g) The aggregate non-audit fees billed by the Registrant’s accountant for services rendered to the Registrant, and rendered to the Registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the Registrant for the period ended March 31, 2024 (the Registrant’s first period of operations) were $1.82 million.
(h) The Registrant’s audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the Registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence. No such services were rendered.
(i) Not applicable.
(j) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the Report to Shareholders filed under Item 1(a) of this Form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
The Fund’s investment adviser, StepStone Group Private Wealth LLC (the “Adviser”), has delegated proxy voting responsibility to StepStone Group LP (the “Sub-Adviser”). The Sub-Adviser’s exercise of this delegated proxy voting authority on behalf of the Fund is subject to the oversight of the Adviser.
The policies and procedures used by the Sub-Adviser to determine how to vote proxies relating to portfolio securities is set forth below:
PROXY VOTING POLICY
Pursuant to Rule 206(4)-6 and Rule 204-2 under the Investment Advisers Act of 1940 (the “Advisers Act”), it is a fraudulent, deceptive, or manipulative act, practice or course of business, within the meaning of Section 206(4) of the Advisers Act, for an investment adviser to exercise voting authority with respect to client securities, unless (A) the adviser has adopted and implemented written policies and procedures that are reasonably designed to ensure that the adviser votes proxies in the best interests of its clients, (B) the adviser describes its proxy voting procedures to its clients and provides copies on request, and (C) the adviser discloses to clients how they may obtain information on how the adviser voted their proxies.
Voting Proxies
The Sub-Adviser is responsible for voting proxies on behalf of the Fund. The Sub-Adviser must vote proxies in a way that is consistent with the Sub-Adviser’s fiduciary duty to the Fund, and any investment policy of the Fund and maintain records of proxies voted, together with a brief explanation why votes were cast in a particular way.
The Sub-Adviser, as a matter of policy and as a fiduciary to the Fund, has responsibility for voting proxies for portfolio securities consistent with the best economic interest of the Fund. The Sub-Adviser’s policy and practice includes the responsibility to monitor corporate actions, receive and vote client proxies and disclose any potential conflicts of interest as well as make information available to clients about the voting of proxies for their portfolio securities and maintaining relevant and required records.
The Sub-Adviser has adopted the following procedures to implement the Sub-Adviser’s firm policy in regard to the Fund.
Voting Procedures
All investment professionals will forward any proxy materials received on behalf of the Fund to the Sub-Adviser’s Chief Compliance Officer, as applicable.
The Sub-Adviser’s Chief Compliance Officer, as applicable, will verify the Fund holds the security to which the proxy relates.
Absent material conflicts, the investment professionals responsible for the investment to which the proxy materials relate, in consultation with Sub-Adviser’s Chief Compliance Officer will determine how the Sub-Adviser should vote the proxy in accordance with applicable voting guidelines, complete the proxy, and vote the proxy in a timely and appropriate manner.
Voting Guidelines
The Sub-Adviser will vote proxies in the best interests of the Fund. The Sub-Adviser’s policy is to vote all proxies from a specific issuer the same way for each client absent qualifying restrictions from a client or as documented in the file by Sub-Adviser’s Chief Compliance Officer, as applicable. Clients of the Sub-Adviser, outside of the Fund, are permitted to place reasonable restrictions on the Sub-Adviser’s voting authority in the same manner that they may place such restrictions on the actual selection of account securities.
The Sub-Adviser will generally vote in favor of routine corporate housekeeping proposals such as to change capitalization (e.g., increase the authorized number of common or preferred shares of stock (to the extent there are not disproportionate voting rights per preferred share)), the election of directors, setting the time and place of the annual meeting, change of fiscal year, change of name, and selection of auditors absent conflicts of interest raised by an auditor’s non-audit services.
In the case of non-routine matters, voting decisions will generally be made in support of management, unless it is believed that such recommendation is not in the best interests of the Fund. On a case by case basis, the Sub-Adviser will decide non-routine matters, taking into account the opinion of management and the effect on management, and the effect on shareholder value and the issuer’s business practices. These matters include, but are not limited to, change of domicile, change in preemptive rights or cumulative voting rights, compensation plans, investment restrictions for social policy goals, precatory proposals, classification of the board of directors, poison pill proposals or amendments, recapitalizations, and super-majority voting.
The Sub-Adviser will abstain from voting if it is determined to be in the best interests of the Fund. In making such a determination, various factors will be considered, including, but not limited to, the costs associated with exercising the proxy (e.g., travel or translation costs) and any legal restrictions on trading resulting from the exercise of the proxy. In consultation with the Sub-Adviser’s Chief Compliance Officer, as applicable, the Sub-Adviser may also consider any special regulatory implications applicable to the client or the Sub-Adviser resulting from the exercise of the proxy.
Conflicts of Interest
The Sub-Adviser will identify any conflicts that exist between the interests of the Sub-Adviser and the client by reviewing the relationship of the Sub-Adviser with the issuer of each security to determine if the Sub-Adviser or any of its employees has any financial, business or personal relationship with the issuer.
If a material conflict of interest exists, the Sub-Adviser’s Chief Compliance Officer, as applicable, will determine whether it is appropriate to disclose the conflict to the affected clients, to give the clients an opportunity to vote the proxies themselves, or to address the voting issue through other objective means such as voting in a manner consistent with a predetermined voting policy or receiving an independent third party voting recommendation.
The Sub-Adviser will maintain a record of the resolution of any conflict of interest.
Recordkeeping
The Sub-Adviser’s Chief Compliance Officer, as applicable, shall retain the following proxy records in accordance with the SEC’s five-year retention requirement.
| ● | These policies and procedures and any amendments. |
| ● | Each proxy statement that the Sub-Adviser receives. |
| ● | A record of each vote that the Sub-Adviser casts. |
| ● | Any document the Sub-Adviser created that was material to making a decision how to vote proxies, or that memorializes that decision including periodic reports to the Sub-Adviser’s Chief Compliance Officer or proxy committee, if applicable. |
| ● | A copy of each written request from the Board for information on how the Sub-Adviser voted the Fund’s proxies, and a copy of any written response. |
Private Markets Investments
Investments in private markets are often subject to contractual agreements among the investors in the fund or company. If the Sub-Adviser has the authority to vote with respect to the interests, it will exercise its rights in accord with its contractual obligations and, if its vote is not constrained by contract, the Sub-Adviser will determine how to vote based on the principles described above. Records relating to the vote will be kept for the five-year retention period.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a)(1) Fund Management
The following provides biographical information about the individual who is primarily responsible for the day-to-day management of the Registrant’s portfolio (“Portfolio Manager”) as of the date of this filing:
Adam Reisler
Mr. Reisler is a Partner of StepStone and member of the infrastructure and real assets team. Prior to joining StepStone, Mr. Reisler was a vice president in KPMG’s infrastructure investment advisory and asset management business, which was merged with StepStone in May 2016.
Mr. Reisler received a Bachelor of Commerce (Hons) from McGill University and an MBA (Hons) and Diploma in Infrastructure and Real Estate from the Schulich School of Business in Canada.
(a)(2) Other Accounts Managed by Portfolio Manager(s) or Management Team Member and Potential Conflicts of Interest
Other Accounts Managed by the Portfolio Manager
(As of March 31, 2024)
Number of Other Accounts Managed and Total (in billions) | Number of Other Accounts and Total Value of Assets (in billions) | |||||||||||
| Name | Registered investment companies | Other pooled investment vehicles | Other accounts | Registered investment companies | Other pooled investment vehicles | Other accounts | ||||||
| Adam Reisler | Zero accounts | Zero accounts | One account, $22.1 | Zero accounts | Six accounts, $3.1 | Zero accounts | ||||||
Conflicts of Interest
A potential conflict of interest may arise as a result of a Portfolio Manager’s provision of advisory services to Other Accounts. Other Accounts may pay higher management fees and/or performance fees than the Fund, and this could create an incentive for a Portfolio Manager to favor such funds in the allocation of investment opportunities.
The Sub-Adviser has implemented procedures that are designed to ensure that investment opportunities are allocated in a manner that: (i) treats all of its clients fairly and equitably; (ii) prevents conflicts regarding allocation of investment opportunities among its clients; and (iii) complies with applicable regulatory requirements. For example, the Sub-Adviser uses an allocation methodology designed to allocate all investments ratably based on a defined allocation procedure. Notwithstanding the foregoing, an aggregated investment may be allocated on a different basis under certain circumstances depending on factors which include, but are not limited to, available cash, liquidity requirements, risk parameters and legal and/or regulatory requirements.
The Sub-Adviser and its investment personnel, including a Portfolio Manager, may hold investments in Other Accounts. This may create an incentive for the Sub-Adviser and its investment personnel to take investment actions based on those investment interests which might diverge, in some cases, from the interests of other clients or favor or disfavor certain funds over other funds. Any potential conflict that arises from these circumstances is mitigated by several factors, including: (i) the fact that the Sub-Adviser’s investment process is designed to achieve long-term capital appreciation as opposed to short-term profits and (ii) the fact that the allocation process is controlled by finance and compliance personnel for the Sub-Adviser.
(a)(3) Compensation Structure of Portfolio Manager
The Sub-Adviser’s philosophy on compensation is to provide senior professionals incentives that are tied to both short-term and long-term performance of the firm. All investment professionals are salaried. Further, all investment professionals are eligible for a short-term incentive bonus each year that is discretionary and based upon the professional’s performance, as well as the performance of the business.
As of March 31, 2024, compensation for the Portfolio Manager includes, a salary, a discretionary bonus and certain retirement benefits from the Sub-Adviser. Additionally, the Portfolio Manager has an equity interest in the Sub-Adviser and indirectly benefits from the success of the Fund based on his ownership interest.
(a)(4) Disclosure of Securities Ownership
The Fund is required to show the dollar amount range of each of Mr. Keck’s and Mr. Elio’s “beneficial ownership” of shares of the Fund as of the end of the most recently completed fiscal year. Dollar amount ranges to be disclosed are established by the SEC. “Beneficial ownership” is determined in accordance with Rule 16a-1(a)(2) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As of March 31, 2024, Mr. Reisler did not beneficially own shares of the Fund.
(b) Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
No purchases were made during the reporting period by or on behalf of the Fund or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of shares or other units of any class of the Fund’s equity securities that is registered by the Registrant pursuant to Section 12 of the Exchange Act (15 U.S.C. 781).
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the Registrant’s board of trustees during the period covered by this report.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The Registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the 1940 Act (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
ITEM 12. DISCLOSURE OF THE SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT COMPANIES.
(a) Not applicable.
(b) Not applicable.
ITEM 13. EXHIBITS.
(a)(3) Not applicable.
(a)(4) Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| (Registrant) | StepStone Private Infrastructure Fund |
| By (Signature and Title)* | /s/ Robert W. Long |
| Robert W. Long, President | |
| (Principal Executive Officer) | |
| Date | June 6, 2024 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| By (Signature and Title)* | |
| /s/ Robert W. Long | |
| Robert W. Long, President | |
| (Principal Executive Officer) | |
| Date | June 6, 2024 |
| By (Signature and Title)* | |
| /s/ Kimberly S. Zeitvogel | |
| Kimberly S. Zeitvogel, Treasurer | |
| (Principal Financial Officer) | |
| Date | June 6, 2024 |
| * | Print the name and title of each signing officer under his or her signature. |
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