Roughly seven months after Dutch pension provider PGGM and local developer BAM PPP announced a joint venture targeting public-private partnership (PPP) projects across Europe, the vehicle has now come to life with the acquisition of its first batch of assets.
Last week, BAM transferred three operational PPPs with a total project value of €300 million to the joint venture – the somewhat long-winded BAM PPP PGGM Infrastructure Cooperatie – which is 80 percent-owned by PGGM.
The projects were sold for an equity consideration of around €45 million and will allow BAM to book a profit of some €10 million. All the projects are backed by “long-term concession agreements with governments” that will provide PGGM with immediate yield and long-term, inflation-linked returns, the partners stated. The only possible downside risk is governments failing to keep to their end of the bargain, a risk the partners deemed “moderate”.
The €390 million JV now has just over €100 million allocated to purchasing existing PPPs from BAM, with the remaining €240 million to be used in bidding for new social and transport projects across the Netherlands, Belgium, the UK, Ireland, Germany and Switzerland. “The joint venture is currently actively bidding across these markets for new projects,” the partners said in a statement.
PGGM has been vigorously pursuing its strategy of investing directly in infrastructure by teaming up with developers across Australia, the Netherlands and Spain. Its first such partnership was formed around this time last year, when it teamed up with Australian developer Lend Lease to launch a £220 million (€259 million; $343 million) infrastructure fund focused on recycling brownfield UK PPPs from Lend Lease.
In May, the pension provider continued forging alliances with developers, teaming up with BAM for their €390 million joint brownfield/greenfield vehicle. And in late October, PGGM, together with Canadian pension OPTrust, agreed to invest €400 million in Spanish developer Globalvia. That investment gives it access to 18 select rail and road concessions located in Spain, Portugal, Chile, Mexico, Costa Rica, Andorra and Ireland.
PGGM, a €105 billion pension provider, had some €1.6 billion of assets under management in infrastructure around September. Adding commitments to infrastructure, that amount increased to circa €2.5 billion. PGGM has been investing in infrastructure since early 2010 through a customised €1.25 billion infrastructure fund, in which three of its pension clients invest. The fund’s investment period ends this month, with PGGM expected to start a new fund in 2012.