Arcus begins to deploy second fund as it targets €1.25bn

The vehicle is aiming for a net IRR of 10% to 15% and has received up to €125 million backing from the EIB.

London-based fund manager Arcus Infrastructure Partners has begun deploying its second fund, investing in Dutch and Swiss fibre broadband companies.

Arcus has bought a 93.1 percent stake in Netherlands-based E-Fiber and said it is planning to make the company “a large-scale infrastructure platform for fibre optics”, expanding its base from the current 100,000 connected households. E-Fiber is both a developer and operator of fibre broadband networks and Arcus plans to inject capital to finance short-term projects with several Dutch municipalities.

Arcus has also agreed to take a 100 percent stake in Swiss4net, owner of fibre-to-the-home providers Ticino Fibre Networks and Baden Fibre Networks. The two companies have a combined 25,000 connected households, with Arcus planning further roll-outs over the coming years.

The deals are the first secured by Arcus’s European Infrastructure Fund 2, a successor to the fund manager’s €2.2 billion first fund raised in 2007 under Babcock & Brown. AEIF2 is targeting €1.25 billion in commitments, according to the European Investment Bank, which in March approved an investment in the fund of up to €125 million. Arcus declined to disclose the hard-cap size.

The vehicle will be targeting a net IRR of 10 to 15 percent, according to the UK-based Clwyd Pension Fund, which has injected €9 million into the vehicle, re-upping its investment in AEIF1. A first close is understood to be expected before the summer.

AEIF2 is set to invest in greenfield projects, according to the EIB, or – as in the case of E-Fiber and Swiss4net – small- and medium-sized infrastructure companies operating significant capital expenditure programmes. In addition to broadband deals, AEIF2 is targeting investments in battery storage, flexible gas-fired generation, interconnectors and “atypical” transportation projects driven by moves towards energy efficiency, alternative fuels and autonomous vehicles, the EIB stated.

Arcus last year announced it had secured investor approval for a 10-year fund life extension of AEIF1, which became effective at the beginning of December. Existing investments comprise five transport assets in Alpha Trains, Brisa, Euroports, Forth Ports and GTC, as well as French telecoms group TDF. It has previously divested stakes in UK-based Angel Trains and Dutch telecoms firm Shere Group.