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Vote of confidence – weekly(3)

Antin’s €2 billion fundraise suggests strong investor belief in both the firm and in the European infra market

The European Parliament elections in May delivered something of a shock to the region’s mainstream parties. Populist candidates managed to grab nearly a third of the 751 seats, with anti-European parties like France’s National Front and the UK Independence Party scoring more than 25 percent of their respective countries’ votes. The result was largely a show of voter discontent: the nations where mainstream parties fared worse were also the ones where leaders seem unable to deliver economic recovery.

If fundraising prowess is to be judged by the same standards as elections, then Antin Infrastructure Partners’ €2 billion final closing on its second vehicle last week suggests strong investor satisfaction with the way the firm has handled their money the first time round. Paris-based Antin’s latest fund is almost twice the size of its predecessor, which closed in 2009 on €1.1 billion; it is also far above its original target, which stood at €1.5 billion. And it is the second-largest infrastructure vehicle for Europe since the Financial Crisis, behind Macquarie’s €2.75 billion European Infrastructure Fund IV.

Yet more interesting is the evolution of Antin’s investor base – or rather, the continuity of it. Out of the €2 billion total, €800 million came from institutions that were already LPs in the firm’s maiden fund. This represents a re-up rate of 70 percent, a figure that climbs to 85 percent when taking into account that French lender BNP Paribas reinvested only through its insurance arm (fresh Basel III constraints did not allow the bank to hold the commitment on its balance sheet).

The geographical split is telling too: only 20 percent of the capital came from France, and 45 percent from the rest of Europe. Much of the new money came from regions further afield such as North America, Australia and Asia, suggesting a maturation of the firm’s client base.

Several market players we spoke to singled out the first fund’s strong performance – both in terms of cash yields and overall returns – as a prime driver behind the fundraise’s success. Antin’s independence – it was established with the backing of BNP Paribas in 2007, and its partners bought the bank’s stake in 2012 – may also have been attractive to LPs. And then there is the team: 35 staff, expected to become 50 over the next few years, headed by nine partners. Alain Rauscher, Antin’s managing partner and chief executive, reckons that this is more resource per euro than most managers of comparable size have at their disposal.

But the firm’s success is also, arguably, a vote of confidence in the region where it operates. Rauscher plays down the influence of macroeconomic factors, but says investors continue to see Europe as one of the world’s most prosperous areas – even though it hardly displays impressive growth rates. If anything, the measures recently announced to shore up its economic fortunes – such as the European Central Bank’s lowering of its deposit rate down to negative levels – are a further incentive for investors to seek enhanced returns in alternative assets, including infrastructure.

Antin’s success has a caveat perhaps. Some observers wonder whether Fund I did find it a challenge to put its last few euros to work: they argue that its acquisition of Westerleigh Group, the second-largest crematoria business in the UK, didn’t quite qualify as core infrastructure, for example. Yet others see Westerleigh as a clever move into a business that displays similar characteristics to the asset class, and point out that Antin has been good at avoiding overheated prices by sourcing proprietary transactions.

Fund II’s first deal, announced this week, seems to prove them right: the firm just bought a North Sea pipeline from UK energy producer BG Group for up to £562 million, apparently outside of the auction circuit.

Investing the rest of the fund into well-sourced deals in a timely fashion is the challenge facing Antin. It certainly has a strong mandate to go out and do business – which is more than what many of Europe’s political parties are able to say.