Balfour Beatty fund manager spins off after MBO

UK developer Balfour Beatty has exited Balfour Beatty Infrastructure Partners LLP – and sold its entire stake in its eponymous fund – in a deal that hands control of the fund manager to its partners.

Following the transaction, the manager has rebranded to Basalt Infrastructure Partners. Its management team comprises Rob Gregor, Steven Lowry and Jeff Neil.

Basalt is the manager of Balfour Beatty Infrastructure Partners LP, a vehicle closed on $618 million in July 2014 to which Balfour Beatty had initially committed $110 million. The fund’s investments include UK solar portfolio McEwan Power, Isle of Wight-based Wightlink Ferries, UK power business Alkane Energy, Michigan utility Upper Peninsula Power Company, Texas Microgrid and a Spanish transportation asset.

In a phone interview with Infrastructure Investor, Gregor said the fund was now nearly fully invested.

Concomitantly to the sale of BBIP, Balfour Beatty has also divested its entire stake in Balfour Beatty Infrastructure Partners LP to New York-headquartered Wafra Investment Advisory Group.

Wafra – owned by The Public Institution for Social Security of Kuwait, an autonomous state-backed agency – has agreed to pay $64.4 million for the London-listed vehicle. Founded in 1985 to manage US assets for financial institutions of Kuwait and other Gulf states, Wafra has since broadened its mandate and now serves more than 30 institutional and private global clients.

The disposal includes a proportion of the rights to participate in the carried interest generated by Balfour Beatty Infrastructure Partners LP.

“Our exit from BBIP and sale of the Fund interest further simplifies the Group and maintains our existing balance sheet strength,” said Leo Quinn, chief executive of Balfour Beatty.

“Exiting the infrastructure fund management market will allow our core infrastructure investments business to focus entirely on its highly successful primary investments portfolio which also offers further downstream opportunities for the Balfour Beatty Group.”

In other news, Balfour Beatty also sold 10 Building Schools for the Future investments to International Public Partnerships (INPP) for £72.6 million. The deal will make INPP the majority investor in BSF, the investment delivery vehicle designed to refurbish secondary schools across the UK.

The London-listed fund hinted it may raise equity after paying for the assets, which will increase the drawn balance of INPP’s revolving credit facility to £96.3 million. INPP has authority to issue shares under its annual tap facility as well as under a prospectus published in December 2015.