The world this month – October 2009

California transportation RFP
The State of California has launched a tendering process to choose a financial advisor for its transport PPP projects. It is offering a management fee of $1.5 million for a two-year mandate to help steer a number of transportation projects through a series of schemes. Governor Arnold Schwarzenegger changed the law in February to pave the way for PPPs in his state which has been beset by budget problems. The RFP for the role requires that the chosen business will have at least ten years’ experience as a financial advisor on large scale projects – including PPPs. Among the projects earmarked is the Doyle Drive Project in San Francisco, which will see a 1.5-mile stretch of road replaced.

Santander confirms fund pull
Spanish banking group Santander has confirmed it is winding down a €1.5 billion infrastructure fund, becoming the latest fund to succumb to a difficult fundraising climate. Speculation in the summer had suggested  the lender was on the brink of ditching the fund. A Santander spokesperson said: “We will no longer be launching a second infrastructure fund, Santander Infrastructure Fund II”. Infrastructure funds globally raised just $4.7 billion in the first half of the year, or about one-fifth their 2008 total, according to updated fundraising data recently provided by San Francisco-based placement agent Probitas Partners.

Infra man back at CalPERS
After several months of uncertainty, Randall Mullan has returned to the California Public Employees’ Retirement System to resume his position as the $199.4 billion pension fund’s senior portfolio manager for infrastructure investments. Mullan was appointed to his position in September 2008. However, after working at the pension for about five months, he had to return to Canada due to visa and immigration issues, according to a friend familiar with the situation. He was formerly the head of private placements at the British Columbia Investment Management Corporation, a funds manager for public pensions and investment trusts in the western Canadian province.

$2bn hydro project in Ecuador
The Republic of Ecuador will soon begin work on a $2 billion hydroelectric project that’s been in the planning stages for more than 40 years thanks to a loan from China’s Export-Import (Exim) Bank. A $1.7 billion bank loan will be provided for the project. It will produce 1,500 megawatts of energy a year. The balance of the cost for the project – which will be located in the country’s Coca river – will come from the Ecuadorean government.

Ambienta closes debut fund
Fledgling private equity firm Ambienta has closed its first fund with a total of €217.5 million in commitments from 20 financial institutions, as well as entrepreneurs, companies and family offices. The Macquarie Clean Technology Fund and Doughty Hanson are among its limited partners. Seventy percent of the capital raised came from institutional investors, led by Italian banking group IntesaSanpaolo, which committed €40 million. Milan-based Ambienta’s fund had been targeting a €250 million final close, according to its website, but wrapped up fundraising after 18 months in the market, in line with Italian regulations, said Nino Tronchetti Provera, the firm’s chief executive.

Infrastructure group hires former Clinton official as president
New York Mayor Michael Bloomberg, governor of California Arnold Schwarzenegger and Pennsylvania governor Ed Rendell have picked Marcia Hale to head the infrastructure policy advocacy organisation they founded, Building America’s Future. Hale will serve as the new president of the organisation effective mid-October, according to a statement. She is replacing Kerry O’Hare, who served as its acting executive director after Polly Trottenberg, the former executive director, left Building America’s Future to serve as the assistant secretary of policy at the US Department of Transportation. “What I really hope to do is grow the organisation to include more state and local officials,” Hale told Infrastructure Investor.

PEP in green energy bid
Pacific Equity Partners (PEP), Australia’s largest private equity firm in terms of assets under management, has made a A$415 million (€256 million; $382 million) offer to purchase Energy Developments. The renewable energy provider, based in Brisbane, counts as its largest shareholder New Zealand-headquartered infrastructure investor Infratil. PEP has offered to pay A$2.65 per share, prompting the stock to rise above A$2.50. Energy Developments has described PEP’s valuation of the company’s long-term future as inadequate, but said in a statement it would not stand in the way of the private equity firm making an off-market bid.

London Pension mulls new deals
UK public pension fund London Pension Fund Authority (LPFA) is to pursue investments in infrastructure and private equity in a move to reduce its cash reserves. LPFA, which has £3.2 billion (€3.5 million; $5.1 billion) under management, said in its recently released annual report wants to invest some of its cash, worth around 7 percent of the pension’s assets, in investments in private equity and infrastructure. “We are looking for investment in private equity and infrastructure, but the problem is that there has been precious little distribution at the moment; not a lot of IPOs and little trade in that area,” Michael Taylor, the pension’s chief executive, said. Of its £2.1 billion active fund, LPFA already has 9 percent invested in private equity and 5 percent in infrastructure investments.

US freight on the move
Freight movements across the US have increased for the first time in five months according to official statistics, signalling the sector could be starting to recover from the downturn. The Freight Transportation Services Index (TSI), published by the US Department of Transportation’s Bureau of Transportation Statistics, showed that the ton-miles of freight shipments rose by 1.6 percent between the months of June and July. The jump in freight usage not only represents the first monthly increase since February, when the TSI increased by 1 percent, but is also significantly the largest rise since January 2008. The index measures freight movements across road, rail and inland waterways, in addition to pipelines and air freight.

Solar investment for HSBC fund
Specialist green infrastructure fund HSBC Environmental Infrastructure Fund and Spanish solar plant developer Solarig have signed an agreement to develop solar plants in continental Europe. The strategic partnership will see the development of over 50 megawatts of photovoltaic projects across Spain and Italy. The two partners are set to invest a combined €200 million into solar projects as a result of the agreement. Solarig will be general contractor for the projects, handling design, engineering and works management, in addition to the operation and maintenance of the plants once they have been completed and connected to the grid.

Montagu in airport lighting deal
Montagu Private Equity has agreed to buy the airfield lighting business of German conglomerate Siemens for an undisclosed amount. The sale is expected to be finalised in October, subject to antitrust approvals. The business, called ADB Airfield Solutions, makes products and provides services for visual guidance in airfields worldwide. The deal is being financed by Bank of Ireland, West LB, Fortis Bank and KBC Bank.

$500m oil deal
Energy-focused private equity firm First Reserve Corporation has invested $500 million for a 99 percent stake in KrisEnergy, a newly-established oil and gas company. Based in Singapore, KrisEnergy aims to build a portfolio of exploration, development and production assets across Southeast Asia. KrisEnergy’s founders and key management hold the remaining 1 percent stake in the company. “We believe that there is a large amount of undiscovered resources here,” Richard Lorentz, KrisEnergy business development director, said. (See page 18 for our interview with First Reserve’s Mark Florian.)

Macquarie International sells infra fund stake
Singapore-listed Macquarie International Infrastructure Fund (MIIF) has sold the majority of its holding in an unlisted Macquarie infrastructure fund in order to pay-down a part of some of its debt. MIIF has agreed to sell 71.6 percent of its interest in the Macquarie European Infrastructure Fund (MEIF), equivalent to a 4.5 percent stake in the fund, for a cash consideration of A$132 million (€63 million; $94 million). John Stuart, the head MIIF’s management, said that the sale is aimed at closing a gap between MIIF’s share price and its director’s valuation of its business. He also said that the firm is likely to sell its remaining stake in the fund in the near future.

Asian fund in London IPO
Impax Asian Environmental Markets, a closed-ended fund, has raised £104.5 million ($170 million; €113 million) via an initial public offering (IPO) on London Stock Exchange’s Alternative Investment Market. The fund is the UK’s largest environmental markets fund and its IPO is the London Stock Exchange’s largest investment company IPO since July 2008. The Asia Pacific-focused fund will primarily invest in listed companies involved in water treatment and pollution control, waste technology and resource management and alternative energy sources.

EDF considers UK grid sale
French energy group Electricité de France (EDF) is looking to sell its UK electricity distribution business in order to reduce its debt by €5 billion ($7.3 billion). EDF subsidiary EDF Energy is the largest electricity distribution operator in the UK, controlling 100,000 miles of cable across the populous London, South-East and East regions of the country. The network supplies around eight million homes and has a staff of roughly 5,000. EDF said it is “initiating a process to evaluate ownership options” of its UK grid in line with its previously announced intention to lower its level of debt.

Ullico sets up infrastructure platform
Ullico, the Washington DC-based insurance group, has formed a dedicated infrastructure investment operation. The privately held financial and risk solutions provider, which already has an in-house real estate investment business, will assist with the investment, maintenance and refurbishment of infrastructure assets in the US. To run the division, Ullico has hired investment professionals Jeff Murphy and Sonia Axter, who have worked together in a number of roles previously. Prior to joining Ullico, they were senior infrastructure investment personnel at Bechtel Enterprises, the infrastructure finance, development, and ownership arm of Bechtel Group.