Babcock’s €2.2bn European infra fund completes MBO(2)

The unlisted infrastructure fund formerly managed by Babcock & Brown will be renamed ‘Arcus European Infrastructure Fund I’ following the completion of a management buyout by a group of former Babcock investment bankers. The group includes Simon Gray, head of European infrastructure mergers and acquisitions.

A group of former Babcock & Brown infrastructure investment bankers have completed a management buyout of the €2.2 billion Babcock & Brown European Infrastructure Fund (BBEIF).

The fund, which was established in 2007 and reached final close on €2.17 billion in December of that year, will be renamed Arcus European Infrastructure Fund. It will be led by Simon Gray and Toto Lo Bianco, who co-founded Arcus to take over the general partnership of BBEIF.

Simon Gray

The fund was previously managed by Babcock & Brown, which was also a limited partner in the fund. The size of Babcock’s interest in the fund was not disclosed, though the firm generally followed a policy of investing between 8 to 10 percent in its managed funds.

In addition to buying out Babcock’s general partnership interest in the fund, Arcus has also bought out Babcock & Brown’s limited interests in the fund, according to a press release. No financials were disclosed.

Gray did not return a call seeking comment.

Gray was previously the head of European infrastructure mergers and acquisitions at Babcock. Lo Bianco served as a board member of BBEIF. They brought with them five other partners, all senior members of Babcock’s European infrastructure investment banking team, and 33 other members of the same team to run the business, according to a press release.

Some of the members of the new Arcus team include Olivier Renault, Arthur Chow, Ian Harding, Francesco Nale and Carl Tishler, according to regulatory filings.

“It’s the same senior team that established BBEIF in 2007 and I am absolutely delighted that the period of uncertainty for the Fund has now been resolved,” Lo Bianco said in a statement.

Arcus was founded in March, regulatory filings show. It is currently in the process of obtaining regulatory authorisation from the UK’s Financial Services Authority, the regulatory body which oversees fund managers.

Banco Espírito Santo de Investimento provided Arcus with debt financing for the BBEIF acquisition.

It is at least the second unlisted infrastructure fund to spin out of Babcock after the firm’s collapse into administration in March. It is unclear what the status is of Babcock’s third major unlisted infrastructure fund – the Babcock & Brown Asian Infrastructure Fund, which closed on $400 million last year and was reportedly targeting $1 billion in total commitments.

In May, the $1.9 billion Babcock & Brown Infrastructure Fund North America, in collaboration with John Hancock Life Insurance Company, acquired Babcock & Brown’s interests in and management rights over the fund, which owns and manages energy and infrastructure assets throughout North America. Post-acquisition, the fund was renamed SteelRiver Infrastructure Partners.

Listed investment entities formerly managed by Babcock have likewise been busy severing their ties with the firm.

In late March, London Stock Exchange-listed social infrastructure fund Babcock & Brown Public Partnerships reached an agreement to internalise its management agreement. Babcock & Brown Wind Partners completed its separation from Babcock in December, and Babcock & Brown Communities has been acquired by property developer Lend Lease and rebranded as Lend Lease Primelife Group.

In late April, they were joined by Babcock & Brown Capital, whose shareholders voted to terminate their management contract with Babcock and change the firm’s name to Eircom Holdings Limited, with new ticker ERC, a reflection of its main asset – Irish telecommunications company Eircom.

Other post-Babcock name changes include “International Public Partnerships Limited’ (formerly Babcock & Brown Public Partnerships), “Alternative Investment Trust” (Everest Babcock & Brown Alternative Investment Trust) and “Everest Financial Group Limited” (formerly Everest Babcock & Brown Limited).