Fundraising

Infracapital starts up greenfield unit

The London-based manager has hired 3i partner Andy Matthews to spearhead the strategy, which will be pursued outside its existing funds.

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Infracapital, the infrastructure investment arm of UK insurer Prudential, is kicking off efforts to invest in greenfield infrastructure to address what it describes as a “unique opportunity”.

The London-based firm has hired Andy Matthews, a former partner at 3i Infrastructure responsible for originating public-private partnership (PPP) and renewable energy deals, to lead the strategy. A spokesperson confirmed that the budding team also comprises a junior investment professional. Another appointment, not yet ready to be announced, is expected to happen in the near future.

“For many years we’ve been involved in greenfield projects on the debt side and historically as well on the equity side. But most recently most of our activity has been around existing operating infrastructure,” Ed Clarke, a director at Infracapital and co-founder of the business, told Infrastructure Investor. “We felt that there continues to be a market opportunity to invest capital in greenfield and we therefore decided that we should beef up our activity there.”

The firm has yet to decide how investments will be structured, but confirmed that they won’t be made through its existing funds, whose mandates largely restrict them to targeting core, operating assets. Infracapital’s latest vehicle, which reached a final close on £1 billion (€1.4 billion; $1.5 billion) last October, is now about a third deployed, Clarke said.

The freshly launched unit will target assets in the energy sector, with a lesser emphasis on transport, telecommunications and social infrastructure.

“There is significant government support for newbuild infrastructure to stimulate the economy, and a lot of opportunities there for investment,” Matthews said. “My background being based in both construction and fund management, it is a good combination to be able to address the needs of the country as well as invest in these assets for the long-term.”

Matthews’s earlier career involved co-developing the equity infrastructure investment strategy of UK developer Alfred McAlpine, as well as structuring and underwriting financial guarantees for the capital market financing of social infrastructure projects at US monoline Financial Security Assurance.

He then moved to UK lender Barclays, where he raised and invested infrastructure funds focused on PPP, concession-based infrastructure, renewable energy and transmission assets, and became a partner at 3i Infrastructure when the London-listed firm bought Barclays’ infrastructure fund business in 2013.

The first asset to come under Matthews’ supervision will be Prudential’s £100 million equity stake in the £1 billion Swansea Bay Tidal Lagoon project, which Infracapital will manage on behalf of its parent group.