John Hancock backs Babcock & Brown infra fund spinout

The $1.9bn Babcock & Brown Infrastructure Fund North America is now an independent entity following a management buyout from bankrupt parent Babcock & Brown. Rebranded as SteelRiver Infrastructure Partners, the San Francisco-based fund is headed by Chris Kinney.

The management team of Babcock & Brown Infrastructure Fund North America, in collaboration with John Hancock Life Insurance Company, has revealed that they have acquired Babcock & Brown’s interests in and management rights over the unlisted fund, which owns and manages energy and infrastructure assets throughout North America.

The companies said that the existing management team will remain in place, with a new entity, SteelRiver Infrastructure Partners, established to acquire the general partner of the fund and to manage its assets.

A person familiar with the transaction told InfrastructureInvestor that the name is meant to “constitute a fusion of two aspects that are close to our business – the resilience of the asset class in which we work and the fluidity of the management of these assets”.

The transaction comes after a competitive bidding process for Babcock's 5 percent interest in the fund and its management rights to the fund. The auction started in February, after Babcock announced that it would undertake an orderly sell-down of its assets in order to pay off its senior lenders. Its stake in its North American infrastructure fund 

Chris Kinney

was identified as one of those assets.

John Hancock was one of the largest investors, or limited partners, in the fund before the buyout. Post-transaction, it will be even larger. Together with John Hancock, other limited partners in the fund overwhelmingly supported the transaction, which was approved by much more than the simple majority it required, the person said.

Chris Kinney, senior managing partner of SteelRiver and CEO of the fund, said in a statement: “With the financial problems of B&B, the management team has been seeking a long-term solution that provides stability to the existing fund and allows our team to best meet our commitments to the limited partners and the other stakeholders of the Fund.”

The Federal Energy Regulatory Commission has approved the acquisition. The value of the deal has not been disclosed.

The total value of the fund is $1.9 billion. Babcock & Brown Infrastructure Fund North America is a San Francisco-based fund, which reached financial close in October last year. The fund’s assets include the Trans Bay Cable, a 53 mile-long high-voltage submarine cable linking San Francisco and Pittsburgh (California), and an 80 percent controlling interest in the Natural Gas Pipeline of America, one of the largest natural gas pipelines and storage systems in the US.

The fund has been investing since early 2008 and is now approximately 50 percent invested.