The Pipeline: Ancala’s third fund launch, US gets infra tsar, MassMutual embraces the green

Ancala eyes €1.2 billion for third fund, Biden hires infrastructure tsar and US data centres get another $10 billion boost.

First look

Waste not: Last month’s Augean deal means Fund II is almost fully invested

Ancala to hit the road with third fund

London-based mid-market manager Ancala Partners is set to launch its third infrastructure vehicle and is believed to be targeting €1.2 billion, The Pipeline understands, with a first close targeted for Q1 next year.

Ancala Infrastructure Fund III will be aiming for double the target size of its predecessor vehicle, which closed on €735 million in February 2020. Following last month’s £390 million ($526.5 million; €463 million) acquisition alongside Fiera Infrastructure of UK-based waste management group Augean, Fund II is almost fully deployed. Its other investments include Liverpool John Lennon Airport, Icelandic geothermal business HS Orka and the already realised Dutch fibre-to-the-office business Fore Freedom. Targeted assets for Ancala, the firm stated at the close of Fund II, “have typically not received the full attention of their previous owners”.

Ancala declined to comment on the fundraising.

Meridiam takes municipalities back to school

Much of the talk at Infrastructure Investor’s New York Forum last week centred on the opportunities arising from the $1.2 trillion infrastructure bill and its effect on US public-private partnership and asset-recycling programmes, including educating states on the options now available.

However, that education is still taking place in Europe, where Paris-based Meridiam is trying to revitalise the PPP model, the firm’s chief executive of Americas, Nicolas Rubio, told the forum.

“In the last fund we raised in Europe, we have a portion of it which is a catalyst portion, which is going to help mainly municipalities analyse and develop these opportunities and [structure] them into P3 deals,” he said.

Has the death knell for PPPs in Europe been sounded too early?

NextEnergy inches closer to $750m target

UK-based renewables manager NextEnergy Capital has secured an additional $87 million in commitments for NextPower III ESG, a 2017-vintage vehicle and the world’s only international fund solely targeting solar assets.

The capital comes from German fund of funds manager Golding Capital and another unnamed existing investor in the vehicle that is upping its commitment, thereby taking the fund’s size to $622 million, including a separately managed account. The 10-year closed-end vehicle has a target of $750 million, with further closes expected this year, NextEnergy Capital said in a statement.

In an update, the firm said that the fund has acquired 20 individual projects plus 12 solar portfolios in countries including the US, Portugal, Spain, Chile, Poland and Italy, with a total installed capacity of approximately 532MW.

NextEnergy expects the fund to reach 2.5-3GW in operating solar projects once fully deployed.

Grapevine

“It is tougher to find assets today that have the return profile we want without stretching into ‘what is the definition of infrastructure?’ That’s an ongoing challenge for us”

Ross Alexander, portfolio manager for infrastructure at the $81.3 billion Alaska Permanent Fund Corporation, tells the New York Forum of its difficulties in deploying capital

Who’s hiring

How to spend BIF

After roughly five years of waiting for an Infrastructure Week to happen, the US now has not just what’s been called “a once-in-a-generation” infrastructure bill, but also someone in charge of overseeing how that $1.2 trillion will be spent. Meet Mitch Landrieu, a former mayor of New Orleans and former lieutenant governor of Louisiana, whom President Joe Biden has appointed infrastructure co-ordinator.

“Our work will require strong partnerships across the government and with state and local leaders, business and labor to create good-paying jobs and rebuild America for the middle class,” Landrieu said in a statement. “We will also ensure these major investments achieve the president’s goals of combating climate change and advancing equity.”

The combating climate change part might have just got a bit more difficult. Three days after that statement was issued, the Biden administration launched “the largest ever sale of oil and gas drilling leases in the Gulf of Mexico”, The Guardian reported.

Seems like Landrieu has left the Big Easy for a not so easy job.

LP watch

MassMutual targets new IPP, net zero with Low Carbon deal

MassMutual, the owner of global asset manager Barings, has partnered with UK renewables manager Low Carbon to launch a global independent power producer. The pair have set a modest goal of 20GW of clean energy – including solar, wind, storage and waste to energy – by 2030. Low Carbon will also help the US life insurance giant transition its $222 billion in AUM to net zero by 2050.

The deal – MassMutual’s first ever renewables partnership in Europe – will see the insurer buy a 25 percent stake in Low Carbon, taking up two board seats at the firm. Subject to regulatory approval, MassMutual intends to increase its stake in the UK manager to 49 percent. The partnership will also help Low Carbon raise third-party funds to invest in projects in the UK, continental Europe and selected global markets.

Roger Candall, MassMutual’s chairman, president and CEO, said both partners held “a common belief [of] investing in large-scale renewable energy projects” to reach net zero.

Given recent fundraising for renewables, the partners are not alone in thinking that.

Deals

Edgy: American Tower’s hefty $10bn CoreSite purchase eyes edge computing market

Will CoreSite give American Tower the edge?

Last week was a momentous one for digital infrastructure. As previously reported, Global Infrastructure Partners and KKR teamed up to clinch the $15 billion take-private of US data centre REIT CyrusOne. And on the same day, American Tower announced its own data centre mega-deal: the $10 billion acquisition of CoreSite, another US REIT.

The price paid by American Tower, analysts unanimously agreed, was a high one. At $170 per share, Seeking Alpha estimated an EV to EBIDTA multiple of 27x. Analysts are less certain, though, whether CoreSite will help American Tower expand its edge computing business, as management contends.

“We don’t see how owning CoreSite advances American Tower’s edge strategy,” wrote MoffettNathanson analyst Nick Del Deo. Wells Fargo analysts, for their part, pointed out that the edge opportunity American Tower is pursuing is worth $3 billion, which pales in comparison with the $50 billion-plus retail colocation and hyperscale data centre market.

Whether it’ll prove worth it or not, it’s yet more proof of how red-hot the digital infra market is these days.

CIP secures Brazil wind deal

Danish fund manager Copenhagen Infrastructure Partners has struck a deal with the government of the Brazilian state of Rio Grande do Norte to participate in an offshore wind power and green hydrogen project.

The firm signed a memorandum of understanding to develop the 1.8GW Alísios Potiguares project in the state of Rio Grande do Norte which is said to have the best conditions in the country for the production of offshore wind.

In a recent interview with Infrastructure Investor, Niels Holst, head of the firm’s New Markets Fund, highlighted Brazil’s potential as a key investment destination for the vehicle.

That was only underlined by CIP’s managing director for Brazil, Diogo Nóbrega, who said: “We don’t find conditions as favourable anywhere in the world as in Rio Grande do Norte”. That’s quite a Grande statement from Nóbrega.

Today’s letter was prepared by Zak BentleyBruno Alves, Kalliope Gourntis, Daniel Kemp, and Tharshini Ashokan also contributed