Luxemburg-based Cube Infrastructure Fund is selling Boreal Group, the fourth-largest public transport operator in Norway, to an infrastructure fund sponsored and managed by Hong Kong’s China Everbright for an undisclosed amount.
The transaction, which China Everbright is funding through its Overseas Infrastructure Fund, marks the fund manager’s first major infrastructure investment in an OECD market. The returns of the Boreal investment are expected to be in line with the fund’s target return range of 10-15 percent, a source familiar with the transaction told Infrastructure Investor.
The Boreal Group operates more than 30 ferries and fast ferries, 900 buses and six trams under long-term, index-linked contracts with local public authorities.
Cube acquired the public transport operator in May 2011 in partnership with its management team. Since then, Cube has supported the company’s growth through new contract wins, strategic add-on acquisitions and the strengthening of the existing concession contract portfolio, the Luxembourg-based fund manager said in a statement.
The result has been an increase in Boreal’s revenues by nearly 50 percent and EBITDA growth of approximately 285 percent between 2010 and 2017 under Cube’s ownership.
The Everbright Overseas Infrastructure Fund, which China Everbright is currently raising, has an appetite for controlling stakes in overseas infrastructure assets, with up to 80 percent of the fund allocated to the OECD markets.
Officially launched in July 2017, the fund has already secured $400 million in commitments with a third close on $700 million expected by May and a final target of $1 billion. Around $150 million has already been invested in two assets – Albania’s Tirana International Airport and an unnamed optical fibre network company in Hong Kong.
China Everbright declined to comment while Cube was not immediately available for comment.