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The Pipeline: US infra bill deploys $110bn, ‘scarcity’ of towers assets, Brookfield’s $4bn home repairs

White House in speedy deployment, OMERS MD decamps to Abu Dhabi and Brookfield turns to home improvements. Welcome to The Pipeline, the start-the-week briefing for our valued subscribers only.

First look

Speedy deployment: nearly 20 percent of the $1.2 trillion infra bill has been invested within six months (Source: Getty)

Just another $1.09trn to go…
Days after November’s passing of the US Bipartisan Infrastructure Law, we held our New York Forum, where DJ Gribbin, founder of consultancy Madras and a former special adviser on infrastructure to President Trump, asked: “Can we actually get the money out the door in a timeframe that is sensible in terms of what the public thinks is sensible?”

Six months down the line and $110 billion has been shifted “out the door”, the White House said last week. That’s 9.2 percent of the overall funding package distributed to over 4,300 specific projects across 53 states and territories, with an interactive map of distributed funding here.

Some will worry that money may not be heading to the right projects, but the president has a plan. The Office of Management and Budget last month released guidance to “combat fraud, waste and abuse” in the BIL’s implementation, the White House said, and “ensure infrastructure projects are delivered on time and on budget”.

Fingers crossed, then.

EU in Russ for renewables increase
The European Commission has announced a proposal to accelerate the European Union’s clean energy transition in an effort to end its dependence on Russian fossil fuels.

As part of the Commission’s new plan – dubbed REPowerEU – the EU’s renewables target will increase to 45 percent by 2030, up from 40 percent, which will see its renewable energy generation capacity reach 1,236GW by 2030. The EU’s renewable energy generation capacity target was initially set for 1,067GW by 2030, as part of its plan last year to reduce its greenhouse gas emissions by 55 percent by 2030.

The plan highlights solar in particular, with a new strategy aiming to have over 320GW of solar power newly installed by 2025 and almost 600GW installed by 2030. Renewable hydrogen is also a focus, with new financing worth €200 million for green hydrogen projects.

Reichmuth raises €145m for third infra fund
The Swiss private bank has received seed commitments totalling €145 million from “various cornerstone investors in Switzerland”, for its third infrastructure fund, which also happens to be its first impact fund.

The Reichmuth Sustainable Infrastructure fund has a final target of €500 million. It is the bank’s first euro-denominated vehicle and represents its first effort to raise capital from non-Swiss LPs.

The fund, which is classified as an Article 9 fund under the EU’s Sustainable Finance Disclosure Regulation, is “dedicated to financing projects in the realm of clean transport, renewable energy, and the circular economy,” the Swiss bank said in a statement. Walter Knüsli, Reichmuth’s head of infrastructure client relations, told Infrastructure Investor last November the fund will “explicitly target CO2 reduction as a major theme” and invest in the waste-to-energy sector.

A first close is expected in Q4, according to last week’s statement.

Influx of capital brings wireless asset ‘scarcity’
Digital infrastructure is a sector that remains alive and well, demonstrated none more so than this month’s $11 billion take-private attempt of data centre firm Switch by DigitalBridge and IFM Investors.

The large-scale deployment is noted in a Q1 report on the sector by investment bank Houlihan Lokey, observing record levels of data centre absorption in the US in 2021 and “strong buyer and investor” interest in the US towers market.

However, a “scarcity due to declining deal volume and the influx of new sources of capital in recent years have driven up average transaction valuations to more than 30 times enterprise value”. The US wireless infrastructure market has previously been dominated by large-scale incumbents such as American Tower, SBA Communications and Crown Castle. So, three guesses as to who these “new sources of capital” driving up values and bringing a scarcity might be.

Grapevine

“It is a clear sign that the renewable sector has lost confidence in the fund. The limited prospects of success mean that companies cannot justify the substantial resources needed to apply.”

Europe’s offshore wind bodies hit out at a perceived unfairness by the European Innovation Fund’s deployment to the sector

Who’s hiring

OMERS sees off (another) executive to Middle Eastern fund
The Abu Dhabi Investment Authority has appointed a new senior portfolio manager for its infrastructure division.

Juan Camargo, who previously worked for the sovereign wealth fund as an investment manager in its infrastructure division, returns to ADIA from Canadian asset manager OMERS Infrastructure, which he joined in 2013. He was most recently a managing director with the pension, covering North American transportation and core-plus sectors as well as energy, transportation, digital infra and regulated utilities across Latin America.

Not the only OMERS long-term employee to have recently flown the coop, Camargo follows Philippe Busslinger, the firm’s former head of Europe, who recently left OMERS after a 13-year stint to head up Wren House, the London-based infrastructure investment manager of the Kuwait Investment Authority.

Denham hires MD for its infra credit expansion
Boston-based asset manager Denham Capital has a new managing director of its nascent sustainable infrastructure credit platform. The new hire, straight from Santander, is industry veteran Alberto Garcia.

Garcia has worked on renewables investing and origination projects for 20 years. One of his most recent accomplishments includes originating the $2.4 billion financing for Vineyard Wind I, the 800MW offshore wind plant that last year became the first utility-scale offshore wind site to reach financial close.

The move comes as the firm seeks to expand its infra credit business, with partner Jorge Camiña stating: “Since its launch last year, we have grown our sustainable infrastructure credit platform considerably and Alberto is a valuable addition.”

The firm has been leading this expansion since its launch in July of last year when it cemented a $2 billion partnership with asset manager Aflac. Prior to this, the firm had only invested in energy transition projects through its equity platforms.

LP watch

ESG low on LPs’ priority list for manager selection
LPs are quick today to highlight how important ESG factors are in investment decisions, but that doesn’t seem to necessarily be the case, according to Seward & Kissel’s 2022 Alternative Investment Allocator Survey, affiliate title New Private Markets reported.

According to the survey, more than 40 percent of respondents said ESG and investment team diversity were the least important issues when sourcing managers, while over 90 percent said the most important factor was investment strategy. Performance track record also ranked as a very important category when selecting managers.

“We don’t think ESG is going away anytime soon, but it has maybe been placed on the backburner because of concerns with Ukraine and markets going crazy,” said Daniel Bresler, a partner at Seward & Kissel.

Deals

Brick by brick: Brookfield is building a ‘residential infrastructure investment platform’ (Source: Getty)

Brookfield turns to home improvements
Another week, another new sector created by infrastructure GPs. This time it’s the turn of Brookfield Asset Management, which has agreed a £4 billion ($5 billion; €4.7 billion) deal to acquire the UK-listed HomeServe, a home emergency repairs and improvements services company. The deal represents a 71 percent premium to HomeServe’s closing share price on 23 March when Brookfield first made an offer.

Confused? Well, it’s part of Brookfield’s attempt to build the “world’s leading residential infrastructure investment platform”, according to a statement from Sam Pollock, chief executive of Brookfield Infrastructure, which would include assets such as its 2018 acquisition of heating and air conditioning group Enercare. Homeserve operates in 10 countries.

Sikander Rashid, a managing partner at Brookfield Infrastructure, added in a statement that it looks forward to “supporting HomeServe’s continued growth globally as critical residential infrastructure is upgraded in the coming years to drive decarbonisation and improve energy efficiency”.

An ambitious attempt then to solve infrastructure’s afterthought.

Antin at the double
It was a busy week for Antin Infrastructure Partners, with the Paris-headquartered fund manager involved in two deals: one in telecommunications and the other in transport.

First, Antin sold Spanish fibre business Iyntia Networks, which owns and operates a network of more than 43,000km of fibre, built primarily alongside electric power and gas distribution infrastructure, to AXA IM Alts and Swiss Life Asset Managers.

The next day Antin announced that its NextGen platform had agreed to acquire a co-controlling stake in Power Dot, an owner-operator of destination and on-route electric vehicle charging infrastructure in Europe. Power Dot’s network comprises approximately 5,000 charging points in high-traffic locations across Portugal, France, Belgium, Luxembourg, Spain and Poland.

The financial terms of the deals were not disclosed.


Today’s letter was prepared by Zak Bentley. Kalliope Gourntis, Tharshini Ashokan and Isabel O’Brien also contributed.