Monday, December 23, 2024

Investcorp chooses M&A with acquisition of Corsair’s global infra business

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Corsair Infrastructure Partners has been partially acquired by Bahraini alternative investment manager Investcorp, as infrastructure manager consolidation across the globe continues.

While the firms declined to state the value of the deal, the move sees Corsair’s existing infrastructure vehicles, funds and assets transferred into a new vehicle in which Investcorp owns a 50 percent stake and Corsair retains the remaining 50 percent.

“The Corsair infrastructure business is unchanged,” said Hari Rajan, managing partner at what is now known as Investcorp Corsair Infrastructure. “It’s not so much a merger as it is a 50 percent interest in the existing business being acquired by Investcorp and that new business operating under the new name.”

Corsair currently has investments in three operational platforms across the US and Europe – Vantage Airport Group, which comprises airports across the US and Canada including JFK Terminal 6 in New York, ports operator DP World Australia and Spanish toll road operator Itínere Infraestructuras. DP World is a Dubai-based company and thus represents the firm’s only exposure to the Middle East, though Corsair is only involved in the company’s Australian operations.

According to Rajan, the two firms had an existing relationship, though he wouldn’t delve into the details. As such, the transaction was executed on an exclusive, bilateral basis.

The purpose of the transaction, according to Rajan, is access. “[With] the strength and quality and depth of our pipeline at Corsair Infrastructure, we felt that it would be very strategically valuable to be aligned and have a partnership with a larger investment organisation that is active in multiple asset classes and has very strong relationships and access to capital in markets around the world.”

He continued: “The strategic benefit here is the ability to pursue our infrastructure pipeline more quickly and more aggressively with the support of Investcorp.”

Investcorp, too, has a lot to gain from the partnership. The firm set up its North American infrastructure practice in April 2022, with the appointment of Michael Ryder – formerly a senior managing director for infrastructure at the Ontario Municipal Employees Retirement System – as a senior adviser to help the firm expand the strategy on the continent. Ryder has since left Investcorp and now works as a partner and co-head of Igneo Infrastructure Partners’ North American business.

According to Rajan, Ryder’s departure had nothing to do with the decision to create the joint venture.

Prior to Ryder’s involvement with Investcorp, the only exposure to the asset class that the manager had was in the Gulf, via a similar joint venture with Abrdn.

Rajan is confident that the two joint ventures will not overlap.

“I’m not familiar with all the details of the Abrdn-Investcorp partnership, other than to say that that is their only existing infrastructure activity and it is focused on the Gulf region. This initiative was really Investcorp entering global infrastructure,” he explained.

Rajan could not state whether Investcorp acquired assets or capital under Ryder’s leadership in North America before the joint venture was created. Investcorp declined to comment.

“We are always on the lookout for ways to expand the business through the platform model,” Rajan explained. “Surface transport, that’s one area that we would certainly be interested in looking at. I would also say the energy transition and decarbonisation as it applies to transportation, as well as digitisation and technology as it applies to transportation. Those are key themes that overlay all of our investing across the various subsectors. Whether that takes the form of another platform, I’m not sure. But we will definitely be looking to expand and grow our capabilities in those two areas.”

Rajan doesn’t foresee any difficulties in foreign investment limitations blocking the acquisition of new assets now that Corsair has Bahraini backing.

“The way we’ve structured this transaction is that the management and the leadership of the infrastructure business remains exactly the same. There’s no change in the management of the business and of the underlying platform and portfolio companies – including some of these more sensitive assets like our airport holdings. From a regulatory perspective, there is a very strong continuity of management.”

The deal is indicative of a greater trend in the industry, where asset managers looking to get infrastructure exposure without facing first-time fundraising hardships acquire smaller specialist funds. Similar transactions this year include Bridgepoint’s acquisition of ECP and CVC’s acquisition of DIF.

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