SMIF invests £115m in PFI portfolio

UK-based Secondary Market Infrastructure Fund, controlled by Star Capital, has bought into prison and facilities manager Global Solutions.

London-based Secondary Market Infrastructure Fund (SMIF), a secondary private finance initiative (PFI) fund owned by private equity firm Star Capital, has invested £115 million (€169 million; $204 million) in a portfolio of 14 investments managed by Global Solutions Limited (GSL), a prison and facilities management business.
Worcester, UK-based Global Solutions is owned by European mid-market firm Electra Partners Europe and UK-based private equity firm Englefield Capital, which acquired the company in May 2004 for £207.5 million.
GSL said in a release that SMIF paid £70 million for an equity stake in 14 of GSL’s private finance initiative (PFI) investments. SMIF will also commit £45 million to Global Solutions, which will retain a minority stake in the portfolio, to help fund new acquisitions.
According to Global Solutions, SMIF was selected as a strategic partner following competition with other secondary and primary infrastructure investors.
Star Capital acquired SMIF from Abbey National and Babcock and Brown for an undisclosed sum in December 2003. At the time, the fund comprised a portfolio of 23 assets in the education, local authority and health sectors.
Established in October 2001, SMIF has invested over £285 million in 37 business assets, according to SMIF, and has a target of £500 million to be invested in infrastructure assets in the UK and Western Europe by December 2007.
SMIF is managed by five partners: Barry Williams, William Doughty, Ian Gethin, Paul McCulloch and Robert Rees.
Private finance initiatives provide a means of funding public service projects using private finance in partnership with the public sector. The secondary PFI sector has proved attractive to private equity firms, with Henderson Private Capital holding a final close of its Henderson PFI Secondary Fund on £330 million last October. Henderson partner Paul Woodbury told PEO at the time that lower-risk assets had struck a chord with investors. Other firms targeting PFI investments in the UK include 3i with its £450 million I2 fund, Innisfree and Noble Fund Managers.