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ABN AMRO Infrastructure agrees MBO

The management team of the €1.1bn infrastructure fund, owner of the Belfast City Airport, has agreed to part ways with Fortis Investments. It will mark the latest management buyout in a year filled with spinouts of infrastructure teams affiliated with big financial firms.

The management team of the €1.1 billion ABN AMRO Global Infrastructure Fund will separate from Fortis Investments, according to a person with direct knowledge of the negotiations.

The person declined to comment on the specifics of the deal but confirmed that the team has agreed to do a management buyout.

The 12-person management team of the ABN AMRO Infrastructure Capital Management looks after the ABN AMRO Global Infrastructure Fund, which held a final close in 2005 and raised upwards of €1 billion in commitments, according to infrastructure fundraising database InfrastructureConnect. Its limited partners include names such as Abu Dhabi Commercial Bank and the AP Fonden III, the third Swedish National Pension Fund, according to InfrastructureConnect.

Belfast City Airport

Hafeez Ahmed, the chief financial officer of the fund told InfrastructureInvestor in September 2008 that the fund was almost fully invested after it acquired Belfast City Airport for £132.5 million from Ferrovial Aeropuertos, the airport investment arm of Spanish construction and infrastructure firm Grupo Ferrovial.

Earlier this year, reports surfaced that the ABN AMRO might be looking to raise a second fund. The latest edition of the Investing in Infrastructure market report, published by San Francisco-based placement agent Probitas Partners, listed ABN AMRO Global Infrastructure Fund II, with a target of €2 billion, as a fund that might soon be coming to market.

That report also predicted that “experienced teams will look to spin-out from now-weakened sponsors as the benefit of sponsorship has dramatically lessened”.

Large financial institutions used to provide funds the benefits of seed capital for their funds as well as access to clients and relationships that aid in fundraising and dealmaking efforts. In the US, a prominent example was Goldman Sachs’ $750 million backing of its first infrastructure fund, Goldman Sachs Infrastructure Partners, which was able to raise $6.5 billion in 2006 at breakneck speed by making use of Goldman’s asset management platform. In Europe, large financial institutions, such as ABN AMRO, sought to do the same for their management teams.

But in the aftermath of the financial crisis, a number of managers have sought to sever ties with their sponsors after many of them fell into trouble. Several funds affiliated with Australia’s Babcock & Brown have spun-out as stand-alone entities, re-emerging as the $1.9 billion SteelRiver Infrastructure Partners and the €2.2 billion Arcus European Infrastructure Fund, formerly Babcock & Brown Infrastructure Fund North America and Babcock & Brown European Infrastructure Fund, respectively.

In Europe, Fortis suffered a similar fate. The banking group was sold to France’s BNP Paribas in a sale brokered by the Belgian and Luxembourg governments after it suffered massive write-downs linked to US sub-prime mortgage securities.

The sale came just months after Fortis acquired a portion of Dutch bank ABN AMRO in a three-way deal with RBS and Santander, which closed in October 2007. As part of the deal, ABN AMRO’s asset management unit became a part of Fortis Investments, the asset management arm of Fortis. As a result, ABN AMRO Global Infrastructure Fund became a part of Fortis Investments.

The ABN AMRO Global Infrastructure Fund was founded in 2004 by Hans Meissner, formerly a corporate managing director at ABN AMRO in London.