North America, prepare for the European invasion

Antin may allocate almost €2bn to the continent, InfraRed is eyeing a dedicated renewables vehicle and Ardian has been there since 2018 with a dedicated fund. Who’s next?

When bands like The Beatles and The Rolling Stones started alighting in the US in the early 1960s, the press coined a term to describe that cultural moment: the ‘British invasion’. If recent moves are anything to go by, the North American infrastructure market would do well to prepare for a European GP invasion.

Yesterday, we wrote about the €6.5 billion close of French fund manager Antin Infrastructure Partners’ fourth fund. The close is significant for several reasons. To start with, it’s a substantial jump for Antin, considering Fund III closed on €3.6 billion in late 2016. It’s also the year’s second-largest close, this one taking place right in the middle of the coronavirus pandemic (although Fund IV had been in market since 2018, we understand a good €3 billion was raised in the covid-19 era). Finally, Antin plans to invest as much as 30 percent of it – or just shy of €2 billion – in the North American market, up from Fund III’s 20 percent.

While partner Mark Crosbie told us Antin is “seeing good quality dealflow on both sides of the Atlantic”, it’s somewhat telling that Fund IV’s sole investment to date – bringing it to the 10 percent invested mark – is the acquisition of Veolia’s US district heating business for $1.25 billion, Antin’s second deal in the region.

The reality is, Antin is not the only European manager that is heading west as its business grows. This week, InfraRed Capital Partners chief executive Werner von Guionneau also told us how the firm plans to capitalise on its acquisition by Canadian firm SunLife to launch a North America-focused renewables fund.

“We analysed the opportunities with our core competencies and the Americas offers the most relevant growth potential,” von Guionneau. “We saw an excellent opportunity in the Americas, particularly in the renewables space.”

And of course, back in 2018, Ardian head of infrastructure Matthias Burghardt had already identified some of the positives European fund managers could bring to the Americas:

“You have very large fund managers [in North America, but] for mid-cap transactions you mainly have energy funds, taking on much more private equity-like risk. So, having someone like us, targeting mid-cap transactions where there is probably less competition, with a moderate risk profile, yield and good performance – there aren’t that many players.”

So, what is allowing European managers to shine brighter in North America these days? We’d argue the answer lies partly with the exponential growth of renewables and digital infrastructure, two sectors that are allowing GPs to make inroads into North America in ways they couldn’t before.

This is especially relevant for the notoriously hard-to-crack US market. After years of waiting for the (non-energy) US infrastructure market to take off – whether through government-backed PPPs or much-vaunted asset recycling programmes – renewables and digital infrastructure are arguably doing the heavy lifting these days.

It’s probably no accident that Antin’s first North American deal – and its first outside Europe – was the acquisition of New England fibre optic developer FirstLight Fiber. Or that, when Ardian closed its Americas fund in 2018, a Texan wind farm was one of the first assets bought by platform Skyline Renewables.

That’s not to say European managers haven’t made inroads into North America before or that renewables and digital are the only avenues available. Still, if you are a European manager looking to take your first tentative steps outside the Old Continent – but wanting to stay within the confines of the OECD – these two sectors certainly allow you to consider North America in a different light today.

So, who might be next? When we caught up with InfraVia Capital Partners last year after the close of their fourth fund, chief executive Vincent Levita told us expansion beyond Europe was in the cards for this decade.

If it ends up alighting in North America soon, we might have to start calling this the ‘French invasion’ instead…

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