Stonepeak Co-Founder Pledges 50% Carry to Enhance Fund I Returns

The Facts -

In an unprecedented move, Michael Dorrell, chairman, CEO, and co-founder of Stonepeak, has committed to allocate 50 percent of his unrealised carried interest from all existing, actively fundraising, and future Stonepeak funds. This decision is intended to enhance the returns of the 2012 inaugural Stonepeak Infrastructure Fund I.

The initiative marks a significant first in the industry, with Stonepeak poised to begin distributions associated with this pledge shortly. The original fund, which achieved a final close in October 2013 at $1.65 billion, surpassed its $1 billion target within a year. Among its commitments was a notable $400 million from TIAA-CREF. The fund was fully committed within three and a half years and allowed for three potential one-year extensions.

Stonepeak’s flagship series usually aims for net returns around 12 percent. However, due to an asset yet to be realised, the fund's net Internal Rate of Return (IRR) decreased to 7.4 percent by the end of Q3 2025, according to Infrastructure Investor data from the Oregon State Treasury. Dorrell's commitment is expected to elevate the Q4 net IRR to 10.6 percent.

Flagship performance

• Stonepeak Infrastructure Fund IV (2020 vintage) Net IRR: 11.1%; Net TVPI: 1.31x; DPI: 0.16x
• Stonepeak Infrastructure Fund III (2017 vintage) Net IRR: 8.6%; Net TVPI: 1.41x; DPI: 0.36x
• Stonepeak Infrastructure Fund II (2016 vintage) Net IRR: 14.4%; Net TVPI: 1.58x; DPI: 1.43x
• Stonepeak Infrastructure Fund I (2012 vintage) Net IRR: 7.4%; Net TVPI: 1.38x; DPI: 1.28x

Source: Infrastructure Investor’s data as of 30 September 2025, citing information from the Oregon State Treasury.

Subscribers can view more details here.

The pledge, as outlined in a memo to Fund I Limited Partners (LPs) accessed by Infrastructure Investor, is designed to provide “a backstop to ensure that Fund I ultimately delivers leading results to LPs”. The memo further states, “it is only appropriate to take this action to ensure you achieve an investment outcome that reflects the broader success that Stonepeak has realised over the last 15 years, none of which would be possible without the confidence you placed in us all those years ago.”

The carry commitment by Dorrell will remain until Fund I achieves either an 11 percent net IRR or a 2.5x gross Multiple on Invested Capital (MOIC). As carry is realised, it will benefit Fund I LPs. Stonepeak’s funds operate with an American-style deal-by-deal carry waterfall and include clawback provisions. Their model features a 20 percent carry with an 8 percent hurdle rate. Adjacent strategies have different terms.

Most of Fund I’s eight investments were realised by October 2021. The investment in Vertical Bridge, owned by DigitalBridge, was one of the last assets exited. The WTG Midstream sale to Energy Transfer followed in July 2024 for $3.25 billion.

Extenet, a digital infrastructure firm, was acquired by Stonepeak and DigitalBridge in 2015 with a total investment value of $1.1 billion. Stonepeak contributed $405 million to the purchase. In 2021, a 30 percent stake was sold to Manulife Investment Management. Recently, Extenet sold its enterprise fiber business to Pilot Fiber, with its net operating income rising to $46.4 million in 2024.

Currently, Stonepeak is raising funds for its Stonepeak Infrastructure Fund V, targeting $15 billion and having secured around $10 billion. This follows the final close of the $14 billion Stonepeak Infrastructure Fund IV. Additionally, Stonepeak is pursuing several other strategies, including its second Asia infrastructure fund, the mid-market Stonepeak Opportunities Fund II, and the Global Renewables Fund II.

---
Read More USA Works News