Patrizia expands into infra with Whitehelm acquisition

Whitehelm founder Graham Matthews will lead the infra business with the aim of growing it to between €15bn-€20bn in the medium term.

Patrizia is adding infrastructure to its product offering with the acquisition of Whitehelm Capital, an Australian infrastructure investment firm founded 23 years ago by Graham Matthews for €67 million in cash and stock.

“Patrizia will further strengthen its position as a leading global real asset investment manager and increase its assets under management… to over €50 billion in line with its mid-term growth strategy,” the German firm said in a statement.

“The acquisition will triple Patrizia’s infrastructure AUM to circa €5.0 billion,” it added, noting that it intends to grow the infrastructure business to between €15 billion-€20 billion in the medium-term.

Whitehelm currently has €3.2 billion of funds under management. Its infrastructure equity portfolio is diversified across the infrastructure space in Australia and Europe, including investments in Sydney and Brisbane airports, UK’s Southern Water, wind farms in Australia, and an energy-from-waste heat generation platform in Norway. The firm also invests in infrastructure debt and listed infrastructure.

For Whitehelm, “it’s really about taking it to the next level, the next stage in Whitehelm’s global growth”, Graham Matthews told Infrastructure Investor.

Matthews will head Patrizia’s infrastructure business with all of Whitehelm’s staff transitioning to the Germany-based firm.

“We’ll continue with our investment philosophy that we’ve had for 23 years; we’ll have independent investment decision-making and that means we can very much continue to do what we’ve been doing very well for our clients but then offer them the additional benefit of being part of a larger, more global organisation,” Matthews said.

The transaction, which also includes Whitehelm Advisers, the asset consulting arm of Whitehelm Capital that has €22 billion of assets under advice, will see Matthews and his management team, currently shareholders in Whitehelm, become shareholders in Patrizia.

“There is also an earn-out structure over the next several years, so, we are very much aligned with Patrizia and our clients in terms of ensuring that the infrastructure business is a success,” Matthews said.

While merging with Patrizia was important in terms of Whitehelm expanding its global footprint, it was also strategically important for Patrizia as it seeks to expand beyond real estate.

Asked whether the decision to expand into other strategies was driven by the impact covid has had on the real estate sector, Patrizia’s co-chief executive Thomas Wels replied: “Our mid-term growth clearly envisioned our expansion into infrastructure and was adopted in 2019, well before the start of the global covid-19 pandemic.”

Patrizia’s new infrastructure business will invest in smart cities and digital infrastructure, decarbonisation and energy transition, water and environmental services, social infrastructure and transportation, according to the statement.

Currently, Patrizia has “existing infrastructure investments on behalf of European insurance companies and pension funds of over €1.5 billion in underground cavern storage facilities containing oil, natural gas and is currently a site for pilot testing hydrogen storage”, Wels said, adding that the facilities are located in Northern Germany and are operated by energy storage solutions provider Storag Etzel.

“Sometimes mergers are about reducing costs,” Matthews said. “This is not about that at all. This is about growth.”

The transaction, which is subject to regulatory approvals, is expected to close by the end of this year or early 2022.