The Pipeline: DWS’s continuation fund; new equity strategy for BNP Paribas; Morgan Stanley’s Altice deal

DWS creates continuation vehicle; ex-Antin partner joins BNP Paribas AM; and Morgan Stanley takes hefty French data centre stake. Welcome to The Pipeline, the start-the-week briefing for our valued subscribers only.

First look

Extra time: Four assets from DWS’s third fund find a new home (Source: Getty)

DWS continuation fund finds new home for four assets

Frankfurt-based DWS’s €3 billion Pan European Infrastructure Fund III has offloaded minority slices of four assets to raise €550 million of equity. Another €200 million was raised for follow-on investments, a source with knowledge of the deal confirms.

The affected portfolio companies are UK bus company Stagecoach, European cancer care and diagnostic imaging platform Ergéa Group, French freight lessor Streem (a joint venture with CDPQ), and Deutsche GigaNetz, a fibre provider. DWS retains majority positions and control of the assets.

The stakes were sold off to a dedicated DWS-controlled vehicle, with cornerstone investments made by Ardian Secondary Fund VIII Infrastructure and the open-end fund AXA IM European Infrastructure. Another 12 institutional investors were involved, among them some existing investors in the original DWS PEIF III fund.

According to sources close to the deal, it had always been DWS’s intention to offload some of the exposure and, as the PEIF III fund had deployed around 80 percent of its commitments, new capital was needed.

Rothschild & Co advised DWS. DWS, Rothschild, Ardian, and AXA IM did not respond to requests for comment.

Quinbrook nears net-zero close

Quinbrook Infrastructure Partners is getting ready to hold a final close on its third flagship vehicle, the Net Zero Power Fund, in Q2 2024, The Pipeline understands.

The firm has been steadily raising capital – including a commitment from Australian superannuation fund Rest that was revealed last week – and is likely to exceed its target of raising $2 billion plus a further $1 billion in co-investments, a source said.

Quinbrook has been busy in recent months. As well as securing what is thought to be Rest’s largest single infrastructure commitment to date, it has announced plans to develop the green data campus Supernode in Brisbane, partnered with Grok Ventures to acquire the Sun Cable project in northern Australia, and revealed a plan to develop a multi-billion-dollar polysilicon manufacturing hub in Townsville, Queensland, to be powered by a combined solar-and-storage renewable energy project.

Plenty of places for it to put all its newly raised capital to good use, then.

SDCL garners €650m for Green Energy Solutions fund

London-based Sustainable Development Capital has reached a final close for its €650 million Green Energy Solutions Fund.

The fund launched in 2021 and the final close was reached on its target. Two thirds of deployment will help reduce energy wastage in the EU, while the US will be another target geography. A percentage of its allocation is dedicated to the UK, and opportunities in Canada will be considered, SDCL informed The Pipeline.

The fund received €125 million in backing from the EU’s European Investment Fund. Other investors included M&G Investments and the Ireland Strategic Investment Fund.

The first deals have been made, according to the manager, though it declined to specify what they were. Other projects are likely to include solar PV or waste-to-heat plants built on or in proximity to energy-demanding sites, as well as the retrofitting of buildings.

The newly closed fund is SDCL’s first since the London-listed SDCL Energy Efficiency Income Trust was launched in 2018. SDCL’s AUM is over $2 billion, according to the manager, and clearly growing.

FP IP and Re:cap launch €400m energy transition fund

FP Investment Partners and Re:cap global investors are at it again, launching their fifth fund together: the €400 million FP Lux Energy Transition Fund.

The Article 9 fund under the EU’s SFDR framework will target renewables – with a focus on solar and batteries – across Europe. However, unlike its predecessors, it will also aim to invest in EV charging infrastructure. It is being backed by insurance companies, pension funds, utilities and savings banks, the partners said, without disclosing their identities.

“In addition to proven investment opportunities in solar and wind parks, battery storage and electric charging infrastructure will significantly sharpen the fund’s return profile,” FP IP managing director Richard Zellmann said in a statement. The fund also has the possibility to fund early-stage projects developed in-house.

Previous funds, managed by renewables specialist Re:cap, have invested some €2 billion in wind, solar and battery storage across Europe, creating a 1.2GW portfolio. The previous effort closed on €290 million in January.

Grapevine

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Who’s hiring

Ex-Antin partner to lead BNP Paribas’s new equity strategy

BNP Paribas Asset Management is expanding its infrastructure offering with the launch of a new energy transition strategy, “based on demand from our investors”, a spokesman for the Paris-based asset manager told The Pipeline. Leading the Low Carbon Infrastructure Equity strategy is Rodolphe Brumm, who joins BNPP AM from Antin Infrastructure Partners, where he served as partner for nearly three years, focused on its NextGen strategy.

He is joined by Frédéric Guiraudios, who is moving to BNPP AM after spending nearly 20 years in M&A as a managing director at BNP Paribas Corporate and Institutional Banking. They will report to Karen Azoulay, head of real assets within BNPP AM’s private assets division.

As part of its new strategy, BNPP AM plans to launch an Article 8 fund at the beginning of next year that will acquire minority stakes in companies across various energy transition-related sectors, including renewables generation, transport decarbonisation, circular economy and carbon capture.

The infrastructure equity strategy will “maintain our strong focus on the energy transition theme, as is already the case in our infra debt strategies”, the spokesman said.

Deals

Data centres: Morgan Stanley creates France’s first independent distributed colocation provider (Source: Getty)

Déjà vu for Altice and Morgan Stanley

Morgan Stanley Infrastructure Partners has acquired a 70 percent stake in a portfolio of 257 data centres in France after partnering with SFR, a subsidiary of Altice France. The carve-out of UltraEdge will be the first nationwide independent distributed colocation provider in France, supported by SFR’s fibre network, which it will retain control of.

The move won’t come cheap, though. The deal provides UltraEdge with an enterprise value of €764 million, a 29x multiple on the portfolio’s pro forma 2023 EBITDA.

It also marks a return of the Altice and Morgan Stanley relationship, with the latter having bought a 49.9 percent stake in the fibre business of Altice’s US subsidiary Lightpath in August 2020. That deal, at a $3.2 billion enterprise value, came in at a rather lower 14.6x EBITDA multiple.

Now, what was that about interest rates bringing valuations down?

More energy for Origin

Just as it seemed the end of the Origin Energy takeover saga was in sight, there comes another twist.

Hours before a scheduled shareholder vote on its takeover offer – which it looked set to lose thanks to the opposition of AustralianSuper – the consortium led by Brookfield Asset Management and EIG Partners lobbed a new proposal into the mix: existing institutional shareholders would have the opportunity to invest in the private Origin Energy business should the vote get up, an option not on the table before; or if it failed, Brookfield proposed to acquire Origin’s energy generation and retail business for A$12.3 billion ($8.1 billion; €7.4 billion) while EIG bought what was left (essentially a stake in an LNG project) through an ordinary resolution that would require only 50.1 percent approval from shareholders.

AustralianSuper wasted no time in sharing its thoughts, to little surprise: “This latest low-ball offer strengthens AustralianSuper’s view that the offer remains substantially below our estimate of Origin’s long-term value.”

Brookfield and EIG still have a job on their hands to convince shareholders, but they do now have another two weeks in which to do it. Origin’s board has postponed the shareholder vote until December 4 to consider the new offer.


Today’s letter was prepared by Bruno Alves. Zak BentleyKalliope GourntisDaniel Kemp and Anne-Louise Stranne Petersen also contributed