Bilfinger curbs fundraising ambitions for listed fund

The prospectus announcement for Bilfinger Berger Global Infrastructure shows that it will seek to raise no more than £212m – compared to a previously announced £245m ceiling. The fund will be listed on the London Stock Exchange.

German group Bilfinger Berger’s has announced publication of a prospectus for its debut London-listed infrastructure fund showing diminished fundraising ambitions.

Bilfinger Berger Global Infrastructure (BBGI) – soon to list on the London Stock Exchange – said it is now seeking to raise up to £212 million (€248 million; $331 million), compared to the £245 million maximum it said it was seeking to raise when it announced the fund in September. Results of the issue will be known on December 14.

The German developer said BBGI will use proceeds from the listing to buy up to 19 of operational or near operational public-private partnership (PPP) assets from Bilfinger Berger Project Investments, the group’s concessions arm. The portfolio will span roads, education, healthcare, justice and other sectors, with the majority of it located in the UK (41.4 percent), and followed by Canada (26.9 percent), Australia (26.9 percent) and Germany (4.8 percent).

In addition, BBGI will be keeping its eye on a potential £270 million plus worth of assets that it has preferential rights in acquiring from Bilfinger Berger Project Investments. The latter  owns 31 PPPs across the world.

According to the prospectus announcement, the fund will target an initial 5.5 percent annualised dividend yield and a rate of return of between 7 percent and 8 percent over the long term. BBGI will be managed internally by transferred staff from Bilfinger Berger with experience in PPP management. 

As a result, “BBGI is expected to realise cost benefits from internal management structure, in particular given that there are no NAV [net asset value] based management fees, acquisition fees or performance fees charged,” Bilfinger Berger explained. “The annualised total expense ratio is therefore expected to decline as the portfolio grows,” the firm added.

‘Developer funds’ have been steadily growing over the last year, as infrastructure developers tap yield-hungry institutional investors as an elegant way to recycle project equity. 

Besides John Laing’s London-listed infrastructure vehicle – the most similar in structure to Bilfinger Berger’s upcoming fund – which raised £270 million when it listed last year, Australian and Dutch developers Lend Lease and BAM PPP have teamed up with pension provider PGGM to form two similar, unlisted joint ventures (for more information on the latter, see the September 2011 issue of Infrastructure Investor).