First look

KKR brings infra to the many
We were certainly among those wanting to hear more when Craig Larson, partner and head of investor relations at KKR, said in an earnings call in August that the firm was planning the launch of “democratised infrastructure and PE strategies”.

That strategy is now being brought to the fore in the form of KKR Infrastructure Conglomerate, which was registered with the SEC last week. The vehicle will be open to “accredited investors”, according to the document, who will be able to purchase shares in the public company, akin to vehicles such as Brookfield Renewable Partners.

KKR Infrastructure Conglomerate, The Pipeline understands, will then provide additional firepower to the manager’s existing infrastructure flagship, Asia and core strategies, investing in deals alongside those private funds.

For a group whose infrastructure AUM has risen more than eight times since 2015 to $49 billion, there should be plenty of opportunity.

What a difference a year makes
Less than a year after its oversubscribed London IPO, Pantheon Infrastructure (PINT) has scrapped a planned issue of £250 million ($277.8 million; €285.2 million) C shares. This is because of the “ongoing extremely elevated levels of volatility in the UK”, according to a statement from the company’s chairman, Vagn Sørensen.

The planned share issue would have added to the £400 million raised in November’s IPO. The new issue was meant to fund co-investments in core infrastructure, with £170 million of assets already in advanced due diligence.

PINT co-invests alongside Pantheon’s private infrastructure funds globally. As of 30 June, PINT had committed £344 million, primarily to investments in digital infrastructure and power and utilities in Europe and North America. It has a net return target of 8-10 percent.

Top of the spills
We find ourselves writing a lot about the travails of UK water companies these days, and that particular well shows no signs of running dry. The latest? Industry regulator Ofwat has instructed 11 water firms to cut £150 million ($167.3 million; €170.8 million) off customer bills for the financial year 2023-24 because of missed targets, many pollution related.

At the top of the polluter’s list are Thames Water and Southern Water, which will have to hand back £51 million and £28.3 million, respectively. Ofwat singled out both for “missed targets on water treatment works compliance, pollution incidents and internal sewer flooding across 2021-22”. Not every water company is on the naughty list, of course. Severn Trent Water and United Water will actually get to claw back £62.9 million and £24.1 million, respectively, through customer bills, having outperformed their targets.

So, what separates Severn Trent and United Water from Thames Water and Southern Water? We’re sure there are many differences, but we can’t help but notice the former two are publicly listed, while the latter two are privately owned…

Grapevine

“There is a significant risk that gas shortages could occur during the winter 2022-23 in Great Britain. As a result, there is a possibility that Great Britain could enter into a gas supply emergency”

Energy regulator Ofgem warns of a cold winter approaching for UK billpayers

Who’s hiring

Blackstone grows European presence with new hires
Blackstone is increasing its European team with two new hires and one internal transfer, The Pipeline has learned.

Gerrit Loots, who until August was managing director for turnaround and performance improvement at Alvarez & Marsal, has joined Blackstone as a managing director to focus on infrastructure operations and asset management. He will be part of the team led by Brian Tierney, who was appointed global head of infrastructure portfolio operations and asset management in July 2021. Loots is the first European operations hire for the firm, The Pipeline understands.

The second new hire is Gabrielle Dale, who, after spending nearly 17 years at Macquarie, joins Blackstone as a managing director on the investment side, working with Jon Kelly, head of European infrastructure.

Blackstone is also relocating managing director Adam Kuhnley to London. Since joining in 2020, he has been involved in a number of the firm’s transactions, including the acquisition in June 2021 of an 88 percent stake in Italian highway operator Autostrade per I’Italia, alongside CDP and Macquarie.

OMERS expands infra team at home and abroad
OMERS Infrastructure  has added three senior members to its asset management team in Toronto, New York and London.

In Toronto, Jenine Krause has joined as managing director from Enercare, a residential heating and cooling services provider acquired by Brookfield in 2018, where she most recently served as vice-chair. She also has experience in the telecoms sector. having spent nearly eight years at Canadian telco Bell, before joining Enercare in 2016.

The second addition to the team is Ilya Khints, who joins OMERS in New York from Anchorage Capital Group as director. His most recent role at the private equity firm, which he held for nearly seven years, was that of operating partner.

Both Krause and Khints joined OMERS Infrastructure last month, while their colleague, Anita Dalvai, joined the organisation in July as associate director. Based in London, Dalvai also has a background in telecoms, having worked for Vodafone as principal in strategy and corporate development since 2019.

After the appointment in April of Harmish Rokadia as a director based in Singapore, the OMERS Infrastructure team now numbers around 80 members worldwide.

LP watch

Last superfund standing?
Infrastructure Investor was back in Melbourne last week for our 2022 Australia Forum, our first in-person event Down Under since the pandemic started.

Among the debates on stage was our LP panel, featuring some of the country’s largest superannuation funds, focused on the impact of the recent Your Future, Your Super reforms.

A major trend among Australian superfunds has been an increased appetite for direct investments, with one outlier among the biggest being Hostplus, which is yet to internalise investments.

Hostplus head of infrastructure Jordan Kraiten, with tongue in cheek as he sat next to representatives from Aware Super, Cbus, Hesta and UniSuper, said: “As we evolve and go through A$100 billion ($63.9 billion; €65.5 billion) of AUM, perhaps we start to change, but we genuinely think that through the generosity of all the GPs in this room, we’ll be able to continue to drive those scale benefits, without having to take capital away from them to manage.”

He added: “We could even give them more because we might be the only one left.”

How’s that for punchy?

Deals

Brookfield’s carbon capture double dip
This summer saw Brookfield and its $15 billion Global Transition Fund plough $500 million into a carbon capture joint venture with the California Resources Corporation. Now the fund, which made headlines this summer as the largest energy transition fund close ever, is back for more.

BGTF is dropping another $500 million to LanzaTech, a Chicago-based carbon capture and transformation platform. The funds will be used to scale LanzaTech’s existing carbon capture and transformation technology, which is currently used to transform carbon waste into fuel, fabric and packaging, to be deployed into commercial-sized production plants. What’s more, if additional milestones are met, Brookfield has stated that it is at the ready to deploy another $500 million, making this a potential billion-dollar investment.

Natalie Adomait, managing partner of Brookfield’s renewable power and transition group, told Infrastructure Investor in July that carbon capture was one of the elements of the fund it was “most excited about”. With LanzaTech the fund’s third such deal, that much is evident.

Today’s letter was prepared by Zak Bentley. Bruno Alves, Kalliope Gourntis, Daniel Kemp, Tharshini Ashokan, Isabel O’Brien and Anne-Louise Petersen also contributed.