3i to boost infrastructure business with Barclays bid

The London-listed private equity and infrastructure fund manager is seeking to acquire the $1.2bn European infrastructure business of Barclays.

3i Group has made an irrevocable offer to the UK’s Barclays Bank to acquire Barclays Infrastructure Funds Management (BIFM), the bank’s European infrastructure fund management arm. 

BIFM has approximately £780 million (€909 million; $1.2 billion) in infrastructure assets under management and investment teams in London and Paris. It is headed by Christopher Elliott (managing director and head of infrastructure investing) together with managing directors Nigel Middleton and Andy Matthews. 

The Barclays unit was one of the first fund managers to target public-private partnership (PPP) deals and raised its first fund in 1996. Since then, it has invested £1.7 billion through six funds in the UK and across Europe in a wide range of sectors including health, education and transport. 

BIFM currently has two active unlisted funds investing in UK and European PPP and energy projects. 3i sees these as a complement to 3i Infrastructure’s European offering, which is focused on core infrastructure. 3i Infrastructure listed on the London Stock Exchange in March 2007, raising £703 million in an initial public offering and then a further £115 million in a placing and open offer in July 2008. 

In a statement, 3i said the acquisition of BIFM would demonstrate its commitment to growing its infrastructure business, as well as increasing third-party income by increasing assets under management. 

Cressida Hogg, 3i managing partner of infrastructure, described the potential acquisition as “a unique opportunity to broaden the expertise in our infrastructure business and acquire a platform for growing our assets under management”. 

In its most recent results for the year to March 2013, 3i Infrastructure announced an 8.6 percent total return on shareholder equity compared with 5.6 percent in 2012. 

As in previous results announcements, the firm pointed to strong performance in Europe and weaker comparative performance from its India fund, a $1.2 billion fund which closed in 2008. The firm recently announced that new India investments are not currently under consideration. 

In its statement, 3i said the proposed acquisition of BIFM was subject to the completion of an employee information and consultation process as well as other regulatory conditions.