Colliers expands into infra with Basalt investment

The infrastructure investment firm is the latest in a series of its kind to sell an ownership stake to infra-hungry asset managers.

Basalt Infrastructure Partners announced on Monday the plans of its founders and a “significant third-party financial investor” to sell 75 percent of equity in the company to the investment management arm of Colliers. The remaining 25 percent will be retained by Basalt’s senior leadership team, which will also see four new members admitted.

The deal, subject to customary closing conditions and approvals, is expected to close in the latter half of this year. Its financial terms were not disclosed, but Colliers expects between $65 and $70 million for the annual run rate of management fee revenue, with an adjusted EBITDA of $35 million to $40 million.

Basalt was founded in 2011 by UK construction group Balfour Beatty Infrastructure Partners before being sold to partners Rob Gregor, Steven Lowry and Jeff Neil in 2016 and rebranding to Basalt. Investing across Europe and North America, it closed its third fund in February last year on $2.75 billion.

The move is not the first in infrastructure for Colliers. In May 2018 it acquired Harrison Street, the real estate fund manager which launched a social infrastructure fund the following June. However, the Basalt deal represents its first dedicated infrastructure manager acquisition.

When asked why Colliers decided to invest in an infrastructure investment firm rather than in infrastructure by itself, Zach Michaud, co-chief investment officer, global, at Colliers responded: “Our partnership with Basalt allows us to provide our LP investors with more choice and products, which benefits them. It is also a segment that we believe will see increased investor allocations, especially for high-quality investment platforms like Basalt and Harrison Street.”

Michaud continued: “We are the type of institutional permanent capital strategic partner that can help firms like Basalt reach their goals, build over the long term and have the long-term track record to back it up. We build businesses for the long term, that is what we are known for.”

A partnership in the vein of third-party investment in infrastructure managers has been on the rise in recent years, with notable deals including the 2019 investments by Japanese financial services group Daiwa, buying a 40 percent stake in Aquila Capital and Dyal Capital Partners’ minority stake acquisition in I Squared Capital. Last year, German firm Patrizia agreed to the acquisition of infrastructure equity and debt GP Whitehelm Capital.

As the Basalt-Colliers deal continues this trend, which began in the private equity market, Michaud predicts such partnerships are likely to grow. “You will continue to see consolidation in the space as LPs look for fewer managers, increased innovation, institutional risk controls, well-thought-out succession planning and continued alignment with their investment management partners. We think both the Basalt and Harrison Street partnerships are great examples of this.”

Basalt declined to comment beyond the announcement of the deal.