What next for RREEF Infra?

As cautionary tales go, the declining fortunes of RREEF Infrastructure, the infrastructure investment business of alternative asset manager RREEF, is a telling one.

Easily one of the most well-regarded teams in infrastructure – with a €2.1 billion fund under its belt – RREEF Infrastructure has ended up having to give back the €620 million raised at first close for its second infrastructure fund and watch global head of infrastructure John McCarthy make for the exit. Worse, rumours suggest a significant part of the original infrastructure team is looking to follow McCarthy’s lead.


It’s hard to believe this might end up being the fate of a team that had such an auspicious start to the fundraising of its second infrastructure fund, which was targeting between €2 billion and €3 billion.

But the black clouds started gathering in late 2011, when Deutsche Bank announced a strategic review of its €516 billion global asset management group – including RREEF, the real estate and infrastructure businesses, DB Private Equity, DWS Americas, Deutsche Insurance Asset Management, and DB Advisors.

What followed will surely rank as one of the most high-profile failed sales processes in recent memory. Initially, Deutsche Bank was said to be keen on disposing of its whole asset management business as a single package, a strategy that was proving difficult with buyers. 

Eventually, though, the bank announced it was in exclusive negotiations with Guggenheim Partners for the sale of undisclosed parts of its global asset management business. Shortly thereafter, RREEF emerged as the sole focus of negotiations.

By this time, the sales process had already slowed down fundraising for RREEF Infrastructure II, with many limited partners (LPs) adopting a wait-and-see attitude after the successful first close. However, Deutsche Bank’s late February 2012 announcement of an exclusive negotiating partner brought some hope the sale would be resolved relatively quickly. 

LPs started reconciling themselves to the idea of RREEF becoming a part of Guggenheim and, by May 2012, sources said there was a further €500 million of capital for RREEF Infrastructure II waiting in the wings.

Then in September, Deutsche Bank dropped the bomb: talks with Guggenheim had collapsed and RREEF would be kept as an integral part of its business after all. This decision, combined with the time wasted during the lengthy strategic review process, proved to be the final nail in the coffin for RREEF Infrastructure II. 

At first, it seemed the fundraising would just be postponed and the fund re-engineered. Crucially, it even appeared LPs were willing to leave the €620 million committed to Fund II intact. That scenario, however, did not materialise and LPs asked for their money back, allegedly citing a misalignment of interests, sources told us.

Earlier this month, a denouement of sorts followed. 

McCarthy, RREEF’s global head of infrastructure since 2005, left “to pursue other opportunities,” Deutsche Bank said. Hamish Mackenzie was appointed as head of infrastructure Europe and infrastructure debt and Nadir Maruf was handed responsibility for the infrastructure business in Asia. The two men are now, effectively, RREEF Infrastructure’s two co-heads.

Unfortunately, this might not be the end of personnel changes at RREEF Infrastructure, with sources suggesting several members of the original team are considering leaving. As for when RREEF can expect to launch another infrastructure fund – or what the full impact of the aborted fundraising on RREEF’s, and Deutsche Bank’s, credibility will be – only time will tell.

For now, we are left with the story of a good team left in disarray as their auspicious second fundraising fell prey to developments beyond their control.