The infrastructure team of London-listed asset manager Intermediate Capital Group is planning to launch its first fund in Q2 this year after closing its maiden deal.
The firm has taken a 30 percent stake in Océinde Group, a fibre broadband provider in the French department Réunion Island, which controls a network covering 80 percent of the territory in the Indian Ocean. The company also benefits from a favourable regulatory regime which can enable Océinde to expand its network quicker than similar companies can do in mainland France, according to Jérôme Sousselier, managing director of infrastructure at ICG.
Océinde has more than 300,000 homes connected to its network on an island with a population of approximately 800,000 and it is also planning to launch a mobile telecoms network. The company’s medium-term target is to have telecoms towers built across the island, Guillaume d’Engremont, head of infrastructure at ICG, told Infrastructure Investor, explaining that the investment was “originated from our network of long-standing corporate relationships in the French market”.
He added that the investment has been financed off ICG’s balance sheet and will be transferred to the fund once launched. D’Engremont also said ICG has invested a mezzanine portion which has a “cash yield which gives us downside protection”.
This investment structure will form part of ICG’s infrastructure investment strategy going forward as it looks to take either majority or minority stakes in mid-market European assets and companies, d’Engremont said. It is eyeing a double-digit IRR and is looking at the energy and transport sectors, in addition to the telecoms investment just made.
ICG launched its infrastructure strategy last year when it hired d’Engremont , Sousselier Ludovic Laforge from EDF Invest in April. The team, all based in Paris, now numbers seven but d’Engremont said it intends to double this by 2020, including outside of France. He added that in the meantime the infrastructure team is receiving assistance from ICG employees in other jurisdictions.