GERMAN INFRASTRUCTURE GROUP Bilfinger Berger is following in the footsteps of UK developer John Laing with a £245 million (€282 million; $384 million) infrastructure fund, to be listed on the London Stock Exchange in November.
The fund, known as Bilfinger Berger Global Infrastructure, will use the proceeds from its London listing to buy a seed portfolio of 20 mostly operational public-private partnership (PPP) projects “with strong yield characteristics,” Bilfinger Berger said in a statement. The portfolio will be acquired from Bilfinger Berger Project Investments, the German firm’s concessions unit, which owns 31 PPPs across the world.
The majority of the projects will be backed by availability payments – public contributions paid in exchange for making assets available in good condition. The seed portfolio is spread across the UK (37 percent), Canada (24 percent), Australia (23 percent), Hungary (12 percent) and Germany (4 percent) and consists of road and social infrastructure projects.
Bilfinger Berger said the fund is targeting an initial annualised yield of 6 percent on the issue price and an internal rate of return (IRR) of between 7 percent and 8 percent over the long term. The German company will own 19.9 percent of the fund at launch.
‘Developer funds’ have been steadily growing over the last year, as infrastructure developers tap yield-hungry institutional investors as an elegant way to recycle project equity.
Besides John Laing’s London-listed infrastructure vehicle – the most similar in structure to Bilfinger Berger’s upcoming fund – which raised £270 million when it listed last year, Australian and Dutch developers Lend Lease and BAM PPP have teamed up with pension provider PGGM to form two similar, unlisted joint ventures.