German contractor Bilfinger Berger SE has launched what it says could be one of the first global investment funds to be based on operating revenue from public-private-partnership (P3) infrastructure assets. The fund, made up of assets of 20 of the firm's P3 projects in Canada, Australia, Germany and the U.K., was "oversubscribed" by investors at its mid-December offering, executives say.
About 80% of shares in the Bilfinger Berger Global Infrastructure Fund were acquired by investors, the firm said on Dec. 14. The fund is valued at about $322 million, says Bilfinger Berger, which holds the remaining 20%. "It is clear the infrastructure fund is being met with tremendous interest, especially in the turbulent capital markets," said Chairman Roland Koch.
The fund is listed on the London Stock Exchange, which has experience in these type of P3 assets, says Damian Joy, president and CEO of Bilfinger Berger Project Investments Inc., the contractor's Markham, Ontario-based P3 unit. He says that while there are similar funds based on U.K.-only assets, the new global fund "has an inherent currency hedge" tied to its mix of currencies that is "attractive for long-term investment." Joy adds that projects are located in "stable western democracies."
The projects' generally more predictable operating income streams are attractive to pension funds, insurance companies and wealth funds, among other investors "that don't like construction risk," he adds. Joy notes the fund's diversity of assets in the transportation, education, health-care and public administration building sectors, among others.
"This demonstrates that, at least in these 20 cases, there appears to be a good track record of deals that became stable operations," says Steve Fleck, vice president of engineer Stantec. "It vindicates due diligence on life-cycle costs, which is the area in which most people have doubts."