Antin buys US district energy business

The deal comes as the French firm is raising its fourth flagship infrastructure fund.

Antin Infrastructure Partners has agreed to its second deal in the US with the $1.25 billion acquisition of a district energy business owned by Veolia Environnement.

The deal follows the firm’s strategy to increase its market position in the US after its New York office opened in January. Veolia’s US district energy business – the largest provider in the country – will give Antin ownership of 13 heating and cooling systems across 10 cities.

Around 80 percent of the business’s revenue comes from three cities – Baltimore, Philadelphia and the Boston-Cambridge area – supplying a wide range of customers, including commercial premises, governments, universities, hospitals, hotels and manufacturing facilities, according to a statement. The average customer’s contract length is 15 years, while some pre-date 1960.

“We see very low customer turnover in the business, which is one of the things that attracted us to it,” Kevin Genieser, a senior partner at Antin who led the transaction, told Infrastructure Investor. “We view this as a key and strategic asset.”

Genieser said Antin’s strategy is to invest in the business. “We think there is a lot of
opportunity here for network densification, tying in other and new customers onto existing
systems,” he explained.

The deal comes as the French firm is raising its fourth flagship infrastructure fund. Its third fund allows up to 20 percent of capital to be deployed into North American Assets.

Genieser said the firm has been applying expertise gained through its European portfolio companies to the US. For the district energy deal, he pointed to the firm’s acquisition last year of Idex, a French integrated operator of energy infrastructure assets.

“We feel very comfortable about the broader macros in this space,” Genieser said.

However, he declined to say whether Antin is financing the acquisition through its fourth flagship fund, Antin Infrastructure Partners IV, which in April, reached first close on more than €2.5 billion. The fund, which is targeting €5 billion, is a continuation of the firm’s strategy to invest in transport, telecoms, social infrastructure and energy. The firm is targeting gross IRRs of around 15 percent.

Infrastructure Investor maps the private markets landscape through its database of investors, managers, and intermediaries. Click here to update or view information on your firm, or to be added to our database. Requests are forwarded to Infrastructure Investor’s Research & Analytics team: researchandanalytics@peimedia.com