Private equity group AXA Private Equity has raised more than 1 billion euros ($1.31 billion) to invest into infrastructure projects, such as gas networks and wind farms across Europe, a person familiar with the fundraising said.

The private equity arm of the French insurer AXA (AXAF.PA) is looking to top this up to 1.5 billion euros for its third and largest infrastructure fund by tapping investors drawn to the sector by the promise of regular dividends and stable long-term returns of 10 to 12 percent.

AXA hopes to reach its target by early next year, the person said, as record numbers of firms pile into the sector and compete for investors' attention.

AXA Private Equity has been an active buyer of mid-sized European companies, particularly in energy infrastructure, with deals for a stake in Luxembourg power generator and transmission group Enevos and Austrian group Verbund's (VERB.VI) French wind farms in the last 12 months.

This latest fundraising also comes as governments across Europe prepare to privatize state-owned assets and attempt to stimulate their flagging economies with large, privately-backed infrastructure projects.

The British government is hoping to create some 40 million pounds ($64.80 million) of new infrastructure projects by pledging lending for deals, while the European Union has also put forward a 50 billion euros plan to improve transport, energy and digital networks.

Banks and large utilities groups, such as Veolia Environnement (VIE.PA), have also been restructuring their portfolios, selling off assets from bus companies to waste handling units.

However, the process of raising funds has been long for AXA Private Equity, mirroring the experiences of many infrastructure and private equity groups who have found it hard to raise capital.

AXA Private Equity started preparing for its latest infrastructure fund in 2009 and has had to tap new investors in Asia, North America and Europe, the person said.

There are some 149 infrastructure groups globally - three times the number in 2007 - vying to raise a total of $98 billion, according to data firm Preqin. Infrastructure funds pulled in some $18 billion globally in the first half of the year.

If it meets its target, AXA Private Equity could draw on up to 3 billion euros for deals, as it counts on appetite from large investors to invest alongside it in deals, the person said.

AXA Private Equity has already sealed four deals from its latest fund, deploying 350 million euros from the fund and a similar amount in co-investments.

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