InfraRed makes first investment in Latin America

01 December 2016 - 12:00 am UTC

UK group acquires 50% of Colombian highway concession

InfraRed Infrastructure Fund III (IIF3) will invest USD 60m for a 50% stake in a Colombian highway concession, its first ever Latin American asset. 

Israeli infrastructure developer Shikun & Binui (S&B) announced on 29 November that it has agreed to sell a 50% stake in the Cundinamarca Eastern Ring Road (Perimetral de Oriente de Cundinamarca) to UK-headquartered InfraRed.

The deal is waiting for standard regulatory approvals before it can reach financial close. Sources informed InfraLatinAmerica that the deal will likely close before the end of this month.

InfraLatinAmerica understands that the divestment is in line with S&B’s global strategy to hold no more than 50% of any large P3 asset.

A source at InfraRed Capital Partners said that IIF3 always had a sub-cap of 10% to invest in emerging markets.

“Opportunities arose in many regions around the world, but we had been following Colombia’s infrastructure program for nearly two years and were very impressed with what the country wants to achieve,” he added.

InfraLatinAmerica understands that the deal will be an all-equity transaction.

Milbank and Posse, Herrera & Ruiz were InfraRed’s legal advisors on the transaction.

S&B closed the project financing for the greenfield project in June this year. It includes USD 460m in subordinated debt and senior debt provided by Chilean bank Itaú Corpbanca, local bank Bancolombia, the Inter-American Development Bank (IDB) and Colombian development bank FDN.

InfraRed Capital Partners reached final close for its InfraRed Infrastructure Fund III in October 2011 with EUR 848m (USD1.2bn) of commitments.

The fund had an investment period of five years that has expired in recent weeks.

InfraRed is currently pre-marketing its fifth unlisted infrastructure fund to investors ahead of a formal launch of the fund early next year.

The fund manager is understood to have mandated Weil, Gotshal & Manges as legal advisor on the fundraising ahead of a formal launch of the fund next year, sources added.

The new fund is expected to be a continuation of InfraRed’s existing unlisted infrastructure strategy and will target a similar volume of commitments to the USD 1.2bn raised for IIF3.