Australia-based First State Investments has agreed to buy Ferngas Nordbayern (FGN), a German gas distributor.
FGN runs a high-pressure gas network of more than 2,100 kilometres in the north-east of Bavaria, southeast Germany, regulated by the German Federal Grid Agency. It was until now a subsidiary of E.ON, the country’s biggest utility.
The deal, funded by First State’s European Diversified Infrastructure Fund (EDIF), its European-focused investment vehicle, comes at a momentous time for the firm. The fund is currently deploying capital raised during its fourth fundraising period, which as at 30 September this year had garnered more than AUS$1.8 billion (€1.2 billion; $1.6 billion) from investors.
A 15-year, closed-ended fund, EDIF has a €1.5 billion target. It has posted robust performance since its inception in August 2009, with total annualised net returns of more than 14.9 percent, including annualised cash returns of 6.4 percent (as at 30 June 2013).
The deal is EDIF’s first in Germany, the Eurozone’s largest economy. In addition to FGN, the fund has already invested €568 million in four core European infrastructure assets: Anglian Water Group, the UK’s fourth largest water and sewerage service provider; Electricity North West Limited, the sixth largest electricity utility in the UK; Reganosa, a Spanish Liquefied Natural Gas regasification plant and transmission network; and Digita, the largest Finnish broadcast tower operator.
First State bolstered its London headcount last month when it added three senior members to its infrastructure investment team. The firm, which is part of Commonwealth Bank of Australia and counts 12 offices globally, now has 14 infrastructure professionals in Europe.