Infracapital buys Swedish utility

The UK fund manager’s investment in Falbygdens Energi is its first in the Nordic country.

London-based Infracapital has acquired Falbygdens Energi (FEAB), a Swedish electricity provider, from power and gas group Göteborg Energi.

FEAB primarily operates in the town of Falköping, around 110 kilometres east of Gothenburg. It focuses on the production and provision of district heating, as well as the distribution of electricity and broadband services in the area. Its network comprises 522 kilometres of overhead lines and 1,690 kilometres of underground cables.

FEAB is Infracapital’s first investment in Sweden. It is the only traditional electricity utility currently in Infracapital’s portfolio, although the firm also owns Calvin Capital, the sole supplier of gas and electricity meters to British Gas customers in the north-east and north-west of England and North Wales.

The transaction will be funded by Infracapital Partners II, which the firm is currently raising with a target of £900 million (€1,081 million; $1,470 million). The vehicle held an interim close on £530 million in September.

The fund’s sole investment until now was in the £1.24 billion acquisition of Veolia UK (since renamed Affinity Water), the UK’s second-largest regulated water-only utility, which it bought alongside Morgan Stanley Infrastructure in June 2012.

Infracapital is part of M&G Investment Management, the European investment management arm of UK financial services group Prudential. It is headed by Martin Lennon, who previously led M&G’s project and infrastructure finance business before founding Infracapital with director Ed Clarke.

Last March, the firm hired Stephen Nelson, the former chief executive of British airport operator BAA, as an asset management director.