French state-backed bank creates infra unit

Caisse des Dépôts et Consignations has announced the creation of a unit dedicated to infrastructure investment – CDC Infrastructure. The new vehicle intends to acquire minority stakes in PPPs across the transport, energy and environmental sectors. CDC Infrastructure will mostly target brownfields and starts with a portfolio of nine holdings worth €600m.

French state-backed bank Caisse des Dépôts et Consignations (CDC) announced today the creation of a new vehicle dedicated to infrastructure investment – CDC Infrastructure.

Alain Quinet, the director of CDC’s finance and strategy division and a long-time public servant who has been an economic advisor to former French prime ministers, is the unit’s chairman of the board. Jean Bensaid, previously an assistant director at the finance and strategy division, is CDC Infrastructure’s new chief executive. He has been at the bank since 2004 and helped build its infrastructure portfolio, making some 10 acquisitions worth about €2.5 billion.

The new unit intends to acquire minority stakes in public-private partnerships across the transport, energy, telecommunications and environmental sectors. Most of its investments will target brownfield assets (70 percent) with the remainder (30 percent) focusing on greenfields, especially those that promote the reduction of carbon emissions.

CDC Infrastructure plans to make 80 percent of its investments in France. Its portfolio initially comprises nine assets worth €600 million but its goal is to grow this to €1.5 billion of assets in the medium term, it said in a statement. The extra €900 million will be invested over the next five years, with €500 million for brownfields and €400 million for greenfield investments.

On the brownfield side, CDC Infrastructure will look to buy into forthcoming share issues in major French regional airports and participate in the modernisation of French railway stations, port infrastructure, energy transmission and select large-scale renewable projects. Greenfield investments will target high-speed rail, the €4 billion Seine Nord canal, the implementation of a green tax for trucks via electronic tolling and a wastewater treatment plant on the island of Reunion.

Its new investments will be financed either with profits generated from its portfolio or with capital increases from CDC. The new unit will seek to invest alongside existing CDC subsidiaries such as French developer Egis, transport unit Transdev and Abertis-owned toll road operator Sanef. Investments will be held in the long term.

CDC has been active in infrastructure for many years, not only as an equity or quasi-equity investor but also as a long-term lender. When President Nicolas Sarkozy launched his €20 billion economic stimulus plan last year, CDC was told to set aside €8 billion in savings funds to help fund up to 25 percent of individual PPP projects.

The bank is also a core investor in the European Union’s recently launched €1.5 billion Marguerite infrastructure fund.