Cevian bets on Bilfinger with 12.6% stake purchase

Cevian Capital, a European investment firm with more than €3.5 billion of capital under management, announced yesterday that it is now the largest single shareholder of German infrastructure group Bilfinger Berger.

The firm acquired a 12.6 percent stake in Bilfinger Berger in an all equity purchase – “Cevian principally works without leverage,” the firm remarked in a statement. The investment firm believes Bilfinger’s “current share price undervalues the company’s strong fundamentals” and indicated that it “does not exclude increasing its stake [in Bilfinger], but does not intend to take over the company”.

Cevian did not disclose how much it paid for the stake but at current share prices, the 12.6 percent holding is worth just over €370 million.

“We have been impressed by the decisive and successful repositioning of Bilfinger Berger towards a leading engineering-driven service provider and we support the path taken by the company,” commented Jens Tischendorf, a partner responsible for Cevian’s German operations.

In a statement, Cevian explained that it invests in a few selected European listed companies by taking significant minority positions in these companies and then engaging in their development through “active ownership”. The firm has offices in Zurich, Stockholm and London and manages capital for pensions, endowments, sovereign wealth funds and other investors spread across Europe, North America and other regions.

Bilfinger Berger recently hit the headlines by announcing that it would be following in the footsteps of UK developer John Laing – the subject of our November 2011 keynote interview – with a £245 million (€284 million; $390 million) infrastructure fund, to be listed on the London Stock Exchange this month.

The fund, known as Bilfinger Berger Global Infrastructure, will use the proceeds from its listing to buy a portfolio of 20 mostly operational public-private partnership (PPP) projects “with strong yield characteristics”, Bilfinger explained in an earlier statement. The portfolio will be acquired from Bilfinger Berger Project Investments, the group’s concessions unit, which owns 31 PPPs across the world.

Bilfinger Berger said the fund is targeting an initial annualised yield of 6 percent on the issue price and an internal rate of return (IRR) of between 7 percent and 8 percent over the long term. The German company will own 19.9 percent of the fund at launch.