Deals

Infrastructure India to internalise management in £2m deal(3)

The UK-listed infrastructure fund is the latest externally-managed fund to propose bringing its management team in-house. Babcock & Brown Infrastructure, Babcock & Brown Wind Partners, Babcock & Brown Communities and Babcock & Brown Capital have all taken similar steps in recent months.

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Infrastructure India, a recently-listed UK infrastructure fund, has proposed to acquire its external manger, Bloomsbury Asset Management Advisors (BAMA), in a £2 million (€2.3 million; $2.9 million) transaction.

If approved by shareholders, the deal will make BAMA’s management – Gary Neville, Nimar Sehmi, Tim Cavanagh and Natalia Poupard – employees of Infrastructure India and eliminate the advisory and performance fees the firm currently pays BAMA under its external management agreement.

“We think this sort of structure is more attractive to investors in the current market . . . essentially what it is doing is changing [Infrastructure India] from a fund structure into a corporate structure so that more returns can stay with the company for the benefit of shareholders,” said Gary Neville, head of BAMA.

Infrastructure India is not alone in internalising its management. In recent months, concerns over performance, fees and corporate governance have put increasing pressure on listed funds to bring their management teams in-house. Babcock & Brown Infrastructure, Babcock & Brown Wind Partners, Babcock & Brown Communities and Babcock & Brown Capital have all taken steps to buy their management rights from their troubled manager, Babcock & Brown.

So far, 81.5 percent of BAMA’s shareholders have accepted Infrastructure India’s buyout offer, which includes £1.15 million of cash and additional payment in Infrastructure India shares, for a maximum deal value of £2 million if all BAMA shares are tendered.

Infrastructure India raised £36.7 million on the London Stock Exchange in June 2008. It invests the proceeds in special purpose vehicles dedicated to building transport and energy infrastructure assets in India.

Its first investment was a £13.5 million purchase of an approximately 6 percent equity interest in a firm established to develop a 400 megawatt hydroelectric power plant in Maheshwar, in Central India. In August 2008 it purchased a 26 percent equity stake in a toll road in central India for £11.3 million.

Since the two investments already comprise 75 percent of Infrastructure India’s IPO proceeds, the firm is looking ahead to raising more funds.

“The main priority for the business is to raise more capital and carry on investing,” Neville said.