The pair bought their stakes from private equity firm 3i, which has been invested in the company since 2007, when it bought an 80 percent stake in Scandlines alongside Allianz Capital Partners for €1.5 billion. The two co-shareholders acquired the remaining 20 percent interest from Deutsche Seereederei three years later, while 3i became sole owner of the ferry operator acquiring Allianz Capital Partners’ 49 percent stake for €165 million and refinancing Scandlines’ debt facilities into a new €875 million package.
However, 3i has agreed to reinvest into Scandlines at the same transaction value as First State and Hermes and will retain a 35 percent stake, generating net proceeds of €347 million. First State and Hermes will hold 50.1 percent and 14.9 percent, respectively.
The deal is the first agreed by Hermes Infrastructure Fund II, a 20-year vehicle with a target of £1 billion ($1.4 billion; €1.1 billion) and a hard-cap of £2 billion, according to pension fund documents. The fund plans to spend a maximum of £300 million on any single investment and a similar geographic split to its predecessor of 89 percent in the UK, 9 percent in Europe and 2 percent in other regions. The fund is understood to have garnered about £130 million by the end of this quarter, following an £80 million first close last year.
The investment is also the second announced by First State in the Nordics this month, following an earlier agreement to acquire E.ON’s gas grid business in Sweden. The firm is currently investing its European Diversified Infrastructure Fund II, which also has French district heating firm Coriance and Portuguese wind company Finerge in its portfolio. The fund is believed to have last year made a request to investors to go beyond its €900 million hard-cap and close on €1.2 billion this year.
First State, the investment management business of the Commonwealth Bank of Australia, is no stranger to Scandlines, with EDIF II’s predecessor fund agreeing in 2015 to buy the Helsingør-Helsingborg route connecting Denmark and Sweden from the ferry company. Scandlines today focuses on its routes between Denmark and Germany, with more than 42,000 departures each year.
Its latest available results show a 10 percent increase on recurring EBITDA margin to €180 million in 2016. Scandlines underwent an €862 million refinancing last year, backed by both banking and institutional sources.