Ancala eyes Europe as Fund II reaches €133m first close

Having deployed roughly 75% of its maiden fund, the UK-based mid-market asset manager has returned to the market, seeking €600m for its sophomore vehicle.

Ancala Partners has raised €133 million for its sophomore vehicle and expects further closes this year before reaching its €600 million target.

While Ancala Infrastructure Fund II will follow the strategy of its predecessor, investing in small to mid-market infrastructure assets, unlike Fund I, it will target opportunities across Europe and not just in the UK.

“Ancala expects most of the Fund to be invested in core Western European countries (France, Benelux, Nordics, Germany, Spain, Austria, Switzerland and the UK),” partner Karen Dolenec told Infrastructure Investor. “In addition, Ancala expects to selectively pursue opportunities in the wider EU where we see attractive risk/return profiles,” she said.

According to a statement, Fund II has a 12-year term and targets an IRR of 10 to 13 percent annually, including a cash yield of between 5 and 6 percent.

“Ancala is comfortably exceeding such return levels on its existing fund,” the firm noted, referring to Fund I, which closed in January 2017 on £400 million ($530.9 million; €453.4 million). According to the Dolenec, Ancala’s debut vehicle is roughly 75 percent deployed with eight assets in its portfolio.

Asked which sub-sectors Ancala will be targeting through its latest vehicle, Dolenec responded: “Similar to our geographic approach, we consider all asset types which meet our risk/return criteria. Historically, around one-third has been invested in renewables and power with exposures also in utilities, midstream and social infrastructure.

“Fund II will target these sectors in addition to a few other areas which the team has experience managing,” she added, but did not provide further details.

The range of equity ticket size will be between €15 million to €150 million, before co-investments, with the average size ranging between €50 million and €75 million.

“Ancala believes small- to mid-cap infrastructure companies have typically not received the full attention of their previous owners, which creates opportunities to improve cost structures and operations through a hands-on asset management approach,” the firm said in its statement.

Several investments Ancala has made over the past two years include the acquisition of a 100MW solar portfolio from Anesco, hydropower developer Green Highland Renewables and the SAGE and Beryl gas pipelines.

In April 2017, it acquired Biogen, an owner and operator of anaerobic digestion plants in the UK, from industry players Bedfordia Group and Kier Group.