Bone: LPs ‘don’t want blind pools any more’

In an exclusive interview with Infrastructure Investor, CP2 managing director Syd Bone claims investors are shying away from the blind pool fund model – and explains his own firm’s institutional club approach.

Speaking in the September 2012 issue of Infrastructure Investor, Syd Bone, managing director of Sydney-based fund manager CP2, says: “There are very big global investors seeking core infrastructure assets. But what we’re doing is quite different to launching funds and getting investors to co-invest with you. Investors are saying ‘we don’t need funds, we don’t want blind pools any more’.”

CP2’s approach involves sourcing opportunities on a deal-by-deal basis and then pulling together a club of institutional investors. This was exemplified by the A$2.2 billion (€1.6 billion; $2.2 billion) public-to-private acquisition last year of ConnectEast, the Australian Stock Exchange-listed owner and operator of the EastLink tollway in Melbourne. CP2, which had built up a 35 percent stake in the asset, rounded up an impressive consortium of eight institutional investors to acquire the remaining 65 percent.

The group comprised: Universities Superannuation Scheme (UK); APG (Netherlands); National Pension Service of Korea; Leader Investment Corporation (a subsidiary of China Investment Corporation); ATP (Denmark); New Zealand Superannuation Fund; Teachers Insurance and Annuity Association of America; and Mirae Asset Maps/Korean Teachers Credit Union.

Bone insists that this does not make CP2 a mere deal broker. “Our service goes beyond what the investment banks do, where they pull the deal together and then walk away. We do the deal and then we manage the asset as well,” he points out.

He says that the firm is planning to replicate the approach with the same club when the opportunity arises. “The reason we call it a club is that we are looking to do more deals with the same group so that things are simplified next time. That’s the plan. We’re used to each other now, and we think that the club members will want to do further deals.”      

With more than A$2.5 billion under management (according to its website), CP2 certainly has some heft. And it may be that Europe is next on the agenda. Bone says nothing to confirm this, but arguably drops a hint or two. “Some would say Australia is a safe haven,  but a lot of people are looking at the Australian market and prices may drift up. Europe is cheaper although people are nervous about the South and pricing may be an issue in the North. But we quite like Europe.”

*The full version of this interview may be accessed here.