UK, Canadian pensions buy ferry operator from Infracapital

The deal brings an end to the firm’s 10-year ownership of Red Funnel, having initially purchased the company from JPMorgan.

The UK’s West Midlands Pension Fund and Canada’s Workplace Safety and Insurance Board of the Province of Ontario have bought ferry operator Red Funnel from Infracapital.

The two investors are the majority owners of a consortium of other UK and Canadian pension schemes, although the duo declined to state the identity of the other members.

The consortium praised the “critical role” played in the UK by Red Funnel, which operates ferry services between the Isle of Wight, off the coast of mainland England, and Southampton. The ferry carried over 873,000 vehicles and 3.4 million passengers last year.

These figures stood at 555,000 vehicles and 3 million passengers in 2006, before Infracapital took over the company from JPMorgan in 2007 in a deal said to value the company at about £200 million ($259.5 million; €227.4 million). While both the consortium and Infracapital declined to disclose the transaction’s financial details, local reports earlier this year suggested a value of about £250 million.

Infracapital had last year outlined a £6.5 million investment project to demolish one of the ferry’s terminals in order to create a new one and ensure a “better gateway” to the island, although this was knocked back by the Isle of Wight planning committee in April 2016. The firm launched the sales process 11 months later, enlisting Macquarie Capital to find a buyer for the asset.

The investment by the West Midlands Pension Fund was facilitated by the Pensions Infrastructure Platform, representing one of the first deals since the PIP shifted its strategy to segregated account investment options from a single co-mingled vehicle.

“We believe in the long-term future of the company and look forward to working with the management to help take the company forward,” chief executive Mike Weston said.