EMEA: Investors behind Infracapital greenfield fund revealed

01 December 2017 - 12:00 am UTC

The full list of investors which brought Infracapital ’s inaugural greenfield infrastructure fund to a GBP 1.25bn final close can be revealed for the first time.

The final close of Infracapital Greenfield Partners I last month completed with pension funds providing at least 45% of secured commitments, GBP 352m (29%) from Prudential plc affiliated companies and EUR 100m from the EIB, according to data revealed exclusively by Inframation.

Figure 1: Infracapital Greenfield Partners I LP Investor Analysis
Infracapital

Speaking to Inframation, Andy Matthews, Greenfield Director at Infracapital said that “we are pleased to play our part in enabling pension fund capital into greenfield infrastructure.”

Among these schemes are eight UK public sector pension schemes with aggregate commitments of GBP 220m. They include the Medical Research Council (MRC) and Environment Agency pension schemes alongside the local authorities of East Riding, Lincolnshire, Tyne and Wear, Suffolk and South Yorkshire, public documents published Thursday (30 November) reveal.

The fundraise, which was ran by placement agent Campbell Lutyens and legal advisor Clifford Chance, also received strong support from Infracapital’s parent-Prudential plc.

The fund was backed by a GBP 275m cornerstone commitment from Prudential Assurance with the British multinational life insurer’s Asian asset management business Eastspring Investment proving GBP 50m and GBP 27.5m from the M&G Group Pension Plan.

With a sixth investment expected to take committed capital to 50% before Christmas, Infracapital seem to be bucking a trend in a sector often categorised as presenting constrained greenfield deal-flow. 

Matthews describes how Infracapital’s new strategy afforded “an obvious value play in the greenfield sector where they could bring his years of construction expertise and Infracapital’s existing asset management and operational expertise to bare.”

Since Matthews’ appointment in 2015 he has been joined by fellow 3i and Barclays Infrastructure Funds Management alumni Michele Armanini to expand the manager’s origination and execution capabilities in the greenfield sector.

The 25-year fund will invest over a five year period in later stage development and construction-stage investments across the energy, transportation, waste, telecoms and healthcare sectors in the UK and continental Europe.

To-date Infracapital have signed five joint ventures including an agreement to invest in broadband in both Poland and the UK alongside Nokia and Gigaclear respectively, a commitment to invest in social infrastructure PPPs in Italy with local developer Condotte and JVs in the energy sector with French solar developer Amarenco Solar and UK biomass and energy-from-waste company Bioenergy Infrastructure Group.

Commenting on the strategy Matthews emphasises how they are “not just looking to sit and wait to invest in shovel-ready projects”, but will seek to “get in early and support developers and contractors to make these projects investable”.

He adds that you “cannot simply impose yourself in a market” but it is much “more effective to work with a local partner to originate deal flow and secure best value.”

Matthews adds that at the heart of a successful joint venture is the adage that “he who is best placed to manage risk should take it” adding that “simply mitigating risk through an EPC contractor isn’t the key to everything.”

It is envisaged that both parties having a share of first-loss will build a relationship which will last through future generations of the greenfield strategy, offering successor funds follow-on investment opportunities in the coming years.

The final close of the greenfield fund coincides with the formal launch of Infracapital Partners III, which aims to raise GBP 1.5bn, according to sources.