The money will be invested over the following two years in “a diversified portfolio of equity [or equivalent] investments in entities owning infrastructure businesses and assets, with an initial focus on Europe, North America and Asia”.
3i’s infrastructure transactions are currently made from its balance sheet and carried out by its growth capital team. Michael Queen, formerly head of 3i’s growth capital team in London, will lead the infrastructure team. Queen will be replaced by Guy Zarzavatdjian, who formerly led the French business.
Initially, the fund will purchase a portfolio of UK investments in this space that 3i has already made.
In October last year, 3i made one of its biggest plays in the infrastructure sector leading a consortium including the Canada Pension Plan Investment Board, Colonial First State Global Asset Management, and Industry Funds Management in the £2.24bn offer for
Other investments included a co-investment in the £142m
Investments by I2 include a stake in AWG, which owns Anglian Water and was taken private last autumn; an interest in PFI project investor Infrastructure Investments LP; and two stand-alone PFI projects, Norfolk and Norwich Hospital and Alpha Schools, Scotland.
3i envisages delivering an annual return of 12% from the fund and paying out 5% each year.
With £7.5bn (US$14.7bn) under management, 3i plans to put £325m (US$637m) into the fund directly. The fund will be chaired by Peter Sedgwick, a former Treasury civil servant who was vice-president of the European Investment Bank for six years.
See p.17 for latest infrastructure data.