£1bn Infracapital fund in Slovakia deal

The M&G Investments infrastructure arm is to acquire utility company GGE from the Grafobal Group conglomerate.

Infracapital’s £1 billion (€1.4 billion; $1.6 billion) fund is making its fourth investment through the acquisition of GGE, a Slovakian utility, from conglomerate Grafobel Group. The size of the deal has not been disclosed.

The London-based fund manager, which is the infrastructure investment arm of asset manager M&G Investments, is expecting to complete the transaction by the end of the summer.

GGE is mainly focused on the production and distribution of heat and electricity using natural gas-fuelled Combined Heat and Power (CHP) plants across the country, which have a total capacity of 303 megawatts.

In a statement, Infracapital said GGE has a strong market position in Slovakia, operates in a stable regulatory framework and has “substantial growth opportunities” in the region. The deal was negotiated and agreed “on a bilateral basis under exclusivity”.

The latest deal follows a similar investment made by Infracapital in December 2013, when it acquired the Swedish electricity distribution and district heating business Falbygdens Energi.

“We are delighted to announce the acquisition of GGE through an off-market transaction, which sees us enter the well-developed Slovakian energy market with a strong regulated core asset,” said Martin Lennon, head of Infracapital, in a statement.

Infracapital closed its latest fund on £1 billion, plus £300 million in co-investment pledges, in October last year. The 12-year fund, which targets core infrastructure assets across Europe, is the successor to a 2005-vintage fund which closed on £908 million.

In April this year, Infracapital launched a greenfield unit (not a part of existing funds) headed by former 3i partner Andy Matthews. The following month, it completed an investment in UK broadband firm Gigaclear.