Bilfinger raises £212m for new listed fund

The offer closed oversubscribed, attracting a ‘well-balanced range of high quality institutional investors’. The fund will use the money to buy up to 19 PPP projects from its developer parent, which owns 19.95% of the vehicle.

Bilfinger Berger, the German infrastructure group, announced today that it has successfully raised £212 million (€252 million; $328 million) for its debut listed infrastructure fund – Bilfinger Berger Global Infrastructure (BBGI).

Bilfinger said the issue for BBGI closed oversubscribed, with a “well-balanced range of quality institutional investors” heeding the call. Bilfinger Berger Project Investments, the group’s concessions business, holds a 19.9 percent stake in BBGI. 

“BBGI has proved to be a highly attractive proposition despite the current volatile markets. We have seen demand from a range of high quality investors which has resulted in an oversubscribed offer,” David Richardson, BBGI’s chairman, commented in a statement. He added: “We look forwards to listing on the LSE [London Stock Exchange] next week.”

The fund plans to use the £212 million it raised to buy up to 19 operational or near-operational public-private partnership (PPP) assets from Bilfinger Berger Project Investments. The portfolio will span roads, education, healthcare, justice and other sectors, with the majority of it located in the UK (41.4 percent), 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 collection of assets that it has preferential rights to acquire from Bilfinger Berger Project Investments. The latter owns 31 PPPs across the world.

BBGI 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. It 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 in a previous statement. “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).