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First State acquires KKR’s Coriance

The firm will buy the French district heating business from the US asset manager amid ongoing fundraising for its second European vehicle.

First State Investments, the asset management division of the Commonwealth Bank of Australia, has made its debut investment in French infrastructure with the acquisition of district heating company Coriance from the US' KKR.

Based in Noisy-le-Grand, Coriance owns and operates a portfolio of 29 regulated district heating concessions in France, under which it supplies heat to residential, social and commercial buildings, First State said in a statement. The company also sells cogenerated electricity to state-owned utility EDF and provides energy services in the heating sector.

Financial terms of the transaction, which is pending customary approvals, were not disclosed. However, when KKR acquired Coriance from Italian energy company A2A in September 2012, it did so for €76.5 million. In April, Infrastructure Investor reported that KKR was looking to realise the investment which it made through its Global Infrastructure Investors fund, KKR’s debut infrastructure vehicle that closed on $1.1 billion in 2012.

“We have really appreciated the period working with KKR as our investor – the relationship between shareholders and management was excellent,” Coriance chief executive Yves Lederer said in the statement. “We have developed our business considerably and have grown renewable energy production as a percentage of our total energy production from 34 percent in 2012 to 60 percent in 2015.” 

It was unclear whether First State is making the investment through its European Diversified Infrastructure Fund. Launched in 2007 as an open-ended vehicle, EDIF then shifted to a hybrid structure in 2009, raising capital from institutional investors in successive “series”. First State reached its hard cap of €2 billion when it concluded Series Five of the vehicle in January 2015.

The asset manager is in the process of raising EDIF2, which will also be raised in stages and target a total of €2 billion. The firm plans to launch three fundraising rounds for EDIF2, however, as opposed to five for its debut European fund. Each series will have a target of €700 million and a maximum size of €900 million.

A spokesperson for the firm was not immediately available for comment.

Having invested in infrastructure for over 20 years, First State currently manages more than €4.8 billion of equity invested across assets in the utility, transport and social infrastructure sectors in Australasia and Europe.