Campden Wealth reproduced Inframation article – The families direct investing in infrastructure and renewables
For decades, wealthy European families have been deploying part of their capital into infrastructure – and often directly into assets.
In doing so, they have bypassed having to pay substantial fees to managers of multi family offices and infrastructure funds. The Spanish infrastructure market, in particular, has a notable number of family owners. The Koplowitz family holds a 22.4% stake in the Spanish construction and concession company Fomento de Construcciones y Contratas (FCC). This business, established and built up by their father Ernesto, is currently managed and part-owned by Esther María Koplowitz, the current vice chairman of FCC. Esther, who bought out her sister Alicia’s stake in FCC in 1997, recently sold a major shareholding in FCC to Carlos Slim, the Mexican telecoms billionaire. Her daughters Alicia Alcocer Koplowitz and Esther Alcocer Koplowitz also own stakes and have management roles at FCC.
Another giant of the Spanish construction and concessions world is Juan Miguel Villar Mir, a former Spanish finance minister, and founder and part-owner along with his children of Obrascón Huarte Lain S.A. (OHL). The source of his
wealth lies not just in OHL, however. His business empire also comprises Grupo Villar Mir, a major producer of hydroelectric power, silicon metal and fertiliser. Elsewhere, in Italy, the Benetton family owns shares via Edizione S.r.l. in Atlantia, the owner of Aeroporti di Roma and Autostrade per l’Italia.
In Ireland, the Dublin-based Roche family is a major investor in infrastructure. Much of the wealth originally derived from the business activities of the now deceased brothers from Dublin, Tom and Donal Roche. They founded the Roadstone Company, an Irish road materials business, which later merged with Irish Cement to form the business, which is listed today on multiple stock exchanges. Tom Roche also founded National Toll Roads (NTR) – a major toll road concessionaire currently headed by Tom Roche Junior. NTR has since diversified into waste, wind energy and biofuels. The Dutch investor AAt Van Hark, the founder of Stichting Van Herk Investments, a major real estate investment company, owns a 10% stake in BAM, which has a large concessions arm.
There are doubtless many other families with stakes of all sizes in infrastructure. But no story about the investment by the wealthy into the infrastructure sector is complete without the tale of Nigel Taee’s successful venture into greenfield private finance initiatives (PFI). Back in 1994, using capital he and his brothers had attained from buying and selling psychiatric units and nursing homes in the UK, Taee led a series of investments into small scale PFIs through the company Grosvenor House Group. The brothers, who were the sole equity investors, also created a separate company to provide facilities management services to the same PFIs, most of which were community hospitals and schools. According to Nigel Taee, who in 2000 bought out his brother’s stakes in the two businesses: “We would rather have control and keep it simple.”
He intends keeping hold of this PFI business which, he said, has on average another 18 years to go before the assets mature. In 2008, Taee, along with several bankers he knew at DTZ, cofounded Gravis Capital Partners, the world’s first listed infrastructure debt fund which to date has raised circa £1 billion ($1.54 billion) of capital.
A taste for renewables
The renewables sector also has its fair share of direct investment from wealthy families and individuals investing directly into the sector. One reason is that wind farms and solar plants, although using relatively nascent technology, can be built more quickly than, say, a gas fired power station. Planning permits and building licenses are also not particularly challenging to attain. All these features make the sector appealing to entrepreneurial types.
One better known example of such an entrepreneur is Jon Moulton, a man who made his fortune in private equity before putting it to work in in renewables. IKEA, which is majority controlled by its founder Ingvar Feodor Kamprad and his family, has made investments in renewables buying a 165-megawatt wind farm in southern Texas last year. Other large family businesses are also betting on renewable power, including Spanish infrastructure giant Acciona. Acciona sold a 33% stake in its international renewable energy business to US investment firm Kohlberg Kravis Roberts (KKR) in 2014.
Another renewables company with links to the world’s wealthy is Tamar Energy. A specialist in the development of anaerobic digestion plants, Tamar Energy has’s no fewer than 39 shareholders. They include the likes of the Duchy of Cornwall (in turn owned by Prince Charles), Nathaniel Rothschild, former Jarvis and Infinis CEO Alan Lovell, (a former chief executive of Jarvis and Infinis), Sainsbury’s Supermarkets Limited, and Lord John Russell, the brother of the Duke of Bedford.
The Rothschild family is also an investor in WHEB Ventures Partners LLP – which also counts amongst its investors JCB chairman Sir Anthony Bamford, Sir Simon Robertson, chairman of RollsRoyce, as well as Ben Goldsmith, the son of late billionaire financier Sir James Goldsmith. In July this year, Ben Goldsmith carried out a London Stock Exchange floatation of Menhaden Capital, an investment fund focused on green investments.
The Duke of Westminster, one of Britain’s richest individuals, is also a major investor in renewables through his vehicle Wheatsheaf. It owns a stake in Zouk, the manager of two environmental funds. Wheatsheaf has also invested in another renewables company, Gilkes Hydro.
This article was originally published in InfraNews, and is reproduced with permission.