SL Capital Partners, Pantheon Ventures and two pension funds have split a stake in a Deutsche Asset and Wealth Management (DeAWM) infrastructure fund sold by BAE Systems‘ pension fund, according to a UK regulatory filing.
BAE Systems’ BAE Systems Pension Funds Trustees, BAS Systems 2000 Pension Plan Trustees and Royal Ordnance (Crown Service) Pension Scheme Trustees, which are all part of the British defence, security and aerospace company’s pension fund system sold 100 percent of its stake in RREEF Pan-European Infrastructure Fund, according to the filing.
RREEF Pan-European Infrastructure Fund is managed by DeAWM, the alternatives and real assets investment arm of Deutsche Bank. The fund raised almost three times its initial €800 million target, closing on €2.1 billion in November 2007, according to Infrastructure Investor Research & Analytics.
BAE sold its stake as part of its portfolio rebalancing, according to a source close to the deal. The fund is performing well and BAE was able to sell its stake for a high price, the source said.
Standard Life’s SL Capital bought the majority of the stake, acquiring around 42 percent of BAE’s interest through its SL Capital Infrastructure Secondary I Fund, which closed this year on an undisclosed sum.
Pantheon snapped up about 33 percent of the stake through vehicles including Pantheon Global Infrastructure Fund II, ASGA Global Infrastructure, Industriens Vintage Infrastructure and Psagot-Pantheon I. Pantheon Global Infrastructure Fund II is a 2014-vintage vehicle that closed ahead of its €700 million target on €1 billion.
The remainder was split almost evenly between Virginia Retirement System, which purchased 12.7 percent of the stake, and Swiss pension fund manager IST3 Investment Foundation, which bought 12.5 percent of the commitment. IST3 manages about 6.4 billion Swiss francs on behalf of about 500 private and institutional pension funds in Switzerland, according to its website.
Formerly known as RREEF Infrastructure, DeAWM’s infrastructure investment business makes investments in infrastructure assets with a focus on economic infrastructure including transportation, utilities and energy-related assets, according to its website.
Bidders on brand name infrastructure funds are now seeking prices between a 10 percent discount to a small premium, with strong demand, the use of intermediaries and high valuations in the primary market leading to high pricing, according to market participants. A September report by Partners Group noted infrastructure secondaries in Europe were achieving high pricing, particularly for later stage fund stakes, reflecting the healthy exit environment and optimistic expectations.
DeAWM, SL Capital and Pantheon declined to comment. IST3, BAE and Virginia Retirement System did not return requests for comment by press time.
This article was first published on Secondaries Investor, Infrastructure Investor's sister website covering alternative asset secondaries markets.