The Foresight Group, a London-listed private equity and infrastructure investment firm, is set to acquire Sydney-based Infrastructure Capital Group for up to A$140 million ($97 million; €94 million) as it seeks to grow its AUM and its presence in the Australian market.
Foresight will pay A$105 million up-front – 50 percent in cash and 50 percent in newly issued shares. An additional sum of up to A$35 million and management performance entitlement of up to A$25 million will be paid in cash and Foresight shares if Infrastructure Capital achieves performance targets by 30 June 2026, the firm said in a statement.
According to Matt Hammond, a partner at Foresight: “Australia is the next place for us to try and build a business based on the themes we’re focusing on elsewhere.”
The themes revolve around the energy transition whether that’s renewable energy, hydrogen, decarbonising transportation, buildings, agriculture or investing in natural capital.
“There is a complementarity between our two firms as the energy transition rolls on,” Hammond said. “What’s coming in the future will be more complex and different. And I think we can really add some value drawing from our experience.”
Foresight, which has an office in Sydney, first invested in Australian solar in 2017. It now manages a portfolio of approximately 252MW, according to its website.
The acquisition, which is expected to complete within the next three months, will add £2.8 billion ($3.3 billion; €3.3 billion), 44 percent of which is invested in renewable energy, to Foresight’s AUM, which as of 30 June totalled £9.4 billion.
“On a day-to-day basis, nothing will change,” Hammond said, adding that Foresight has no intention to change what Infrastructure Capital does and will retain its entire staff of 57 full-time employees.
“We’re definitely keeping the whole team and hoping to grow it as a business. There’s no part of our plan that comes from cost savings or anything like that,” he added.
The acquisition also “creates a pathway for Foresight to address Asian markets which represent a compelling opportunity for real asset investors, especially in the energy infrastructure sector where the combined group is better positioned to successfully raise and deploy capital over time”, according to the statement.
Asked to elaborate on the firm’s Asia ambitions, Hammond replied: “The same drivers for sustainability generally, and climate change specifically, are evident everywhere and every government is grappling with it. But governments in Asia are grappling with it more than they used to. There’s also not really an established fund management industry in the region. While there is progress with regards to renewable energy, it’s driven by utilities and larger investors.
“So, the understanding of Asia, particularly Southeast Asia, is much higher among Australian institutions. There are no specific plans for a product in the region at the moment, but this is one of the areas that we’ll turn our mind to over the next couple of years.”
Acquiring ICG is in line with Foresight’s goal of growing its AUM by 20-25 percent annually over the medium term, a goal it established after its IPO in February 2021.
But Foresight has been building its product offering even before it listed on the London Stock Exchange. In June 2019, it acquired John Laing Environmental Assets Group (JLEN) and the following year acquired UK pension investment vehicle Pensions Infrastructure Platform.
Asked whether Foresight plans on continuing the trend of acquiring other GPs, Hammond said: “If we find other opportunities to accelerate our growth by acquiring a firm that’s already doing something really well and where we think we can add to that, then that’s what we’re looking for.”