Alinda builds out ‘core’ infra team

The addition of UBS utilities banker James Metcalfe rounds out a six-member senior management team devoted to core infrastructure, a new strategy for the independent fund manager. Metcalfe’s hire comes as Alinda is opening a office in Houston and plans another office in continental Europe.

Alinda Capital Partners has hired a utilities investment banker from UBS as its seventh partner, rounding out the senior management team of a new investment strategy focused on core infrastructure assets, according to a senior executive at the Connecticut-based firm.

James Metcalfe, the global head of power and utilities investment banking at UBS, is joining Alinda's core infrastructure team, a new investment strategy focused on very steady, low-risk assets. Until now, the independent fund manager has focused on value-added opportunities, or relatively higher-growth and higher-risk investments across its first $3 billion fund and its second $4 billion fund.

James Metcalfe

“It expands the range of investible opportunities for us,” Chris Beale said in an interview.

With Metcalfe’s hire, Alinda’s build-out of the core infrastructure team’s senior management is now complete, Beale said. The team includes two partners, two managing directors and two directors devoted to the new strategy.

The partners are the newly hired Metcalfe and Graeme Bevans, former head of infrastructure at the C$140.1 billion (€98.5 billion; $145 billion) Canada Pension Plan Investment Board, who joined the firm in July 2010 and has been developing the core infrastructure strategy ever since.

Richard Klapow, a managing director who joined Alinda in 2008, will move over from the firm’s value-added team to the core group and will focus on utilities, Beale said. Craig Harris, former director of the midstream group at pipeline operator El Paso Corportation, will also serve as a managing director.

Guy Harris, former director of strategy and performance management at DTE Energy, and Patrick Bastien, former head of Veolia Energy North America’s business in the Western United States, both joined the core team as directors, Beale said.

Alinda will focus on adding more junior-level hires to the team, which will look to source “core” infrastructure assets with mature growth profiles and steady and predictable financial results.

“An example of a core investment might be a typical utility. With utilities, which are local monopolies, those are regulated returns and there’s the ability to outperform a little bit and an opportunity to underperform a little bit but the band of expected outcomes is going to be relatively predictable,” Beale said.

Value-added investments, on the other hand, “are slightly higher risk infrastructure investments with better-than-normal infrastructure returns”, Beale said, adding that all of the investments Alinda has done in its first two funds “have a value-added strategy, whether it’s through expansion or some other activity that is designed to produce growth and better-than-average returns”.

He pointed to Alinda Infrastructure Fund II’s $1 billion joint venture with Regency Energy Partners to finance and construct a pipeline in Northern Louisiana as an example of a value-added investment.

“We provided the capital to double the capacity of that pipeline,” Beale said. “That significant expansion of the asset was a value-add.”

Alinda’s entry into core infrastructure comes during a busy time for the rapidly growing firm, which has grown from 40 employees around this time last year to 52, including Metcalfe.

The firm will be opening an office in continental Europe “in the next few months”, Beale said. The office will mark the firm’s second office in Europe, after London, and will come on the heels of a €300 million investment in a German biogas company announced in March.

Alinda has also just signed a lease on an office in Houston, which will mark its second office in the US after Greenwich, Connecticut. “Houston, we think, is a good location because that is where a lot of the energy infrastructure transactions clear,” Beale said. The core infrastructure team’s Craig Harris will be based in the new office.

The Greenwich office is also new to Alinda, as the firm moved there in December from its previous headquarters in midtown Manhattan. Beale said the reason for the move was simple: “We ran out of space”.