EMEA: NIBC puts entire infra portfolio up for sale

06 April 2018 - 12:00 am UTC

NIBC has issued teasers for the sale of its sole European Infrastructure Fund (NEIF), including a 55% stake in UK service station operator Welcome Break, in a deal that could value the portfolio at around GBP 600m, Inframation understands.  

Sources said NIBC has mandated Evercore as its financial advisor on the sale of NEIF, which also includes six stakes in hospitals, a care home and other PFI projects in the UK as well as six assets in continental Europe including solar and wind farms. Weil Gotshal & Manges is acting as NIBC’s legal advisor.

Welcome Break, which operates 27 service stations across the UK, is understood to account for around two-thirds of the value of the NEIF portfolio. 

The NEIF could be sold in its entirety to one buyer or different parts could be sold to different buyers, one source said, adding that NIBC has received interest from potential buyers interested in buying some or all of the portfolio.

First round bids for the portfolio are due at the end of this month, one source with knowledge of the process said.

NIBC launched fundraising for the 12-year fund in 2007 and raised just over EUR 347m later that year with cornerstone commitments from PGGM, APG-managed Stichting Pensioenfonds ABP and NIBC bank, short of its EUR 500m hard cap target.

It is understood it hired advisors last year to investigate sale options for the fund but only recently launched a process. 

The sale takes place at a boom time for asset and portfolio sales as the likes of KKR, Ardian and Cube seek to sell assets in preparation for new fundraisings, while other funds have sold out as they have reached maturity.

It also follows the sale last June of Eiser’s infrastructure portfolio to 3i Group, APG and Arbejdsmarkedets Tillægspension (ATP). Eiser reached final close with fundraising in 2007 with EUR 1.1bn of commitments.

Sources tipped APG as a potential buyer of NIBC’s portfolio. ABP, which APG manages, is a significant investor in the NIBC fund. Also, APG has been a major player in portfolio acquisitions, buying up all of DIF II’s portfolio last July, as well as Ardian’s second infrastructure fund last December and a stake in Eiser’s portfolio.

One source said NEIF’s LPs recently rebuffed efforts by some fund managers to replace NIBC as the Dutch fund’s manager.

NEIF has been run by what was described as a skeleton staff for several years under Darren Kyte, who has run the fund since inception.

NIBC acquired its stake in Welcome Break, which is the second-biggest service station operator in the UK, in 2008 for a reported GBP 500m. NIBC’s co-shareholder in Welcome Break, Arjun Infrastructure Partners, bought its 45% stake from ING European Infrastructure Fund and Challenger Life, last year for a sum that reportedly gave Welcome Break an enterprise value of GBP 700m. 

NIBC’s most recent Ebitda was in excess of the GBP 65m Ebitda it posted for the year ended 31 January 2017, Inframation understands. Recent multiples for UK service station transactions include the 12.5 times earnings Antin reportedly paid for a stake in Roadchef in 2015.

Arjun does not have pre-emption rights on NIBC’s stake in Welcome Break, it is understood. 

One issue that could hold back Welcome Break’s valuation is the fact that some of its sites are on leasehold land rather than freehold land, sources said, meaning that it will have to pay to extend leaseholds when they expire. 

Welcome Break has debt of around GBP 400m, it is understood

Welcome Break in its latest reported full year results for the 53 weeks ended 31 January 2017 reported turnover up 3.1% at GBP 227.3m, lifting operating profit by 37.8% to GBP 11.8m. It said traffic has been resilient “despite the significant Brexit result.”

The rest of the portfolio includes stakes in six UK PFI projects including the Addenbrooke’s PFI hospital project in Cambridge. In mainland Europe, NEIF’s assets comprise stakes in two windfarms in Germany, a small portfolio of wind farms in France and Belgium, a solar farm in Germany, a 25% stake in a solar farm in Spain and a stake in a biomass generation plant in Belgium.

NIBC