A consortium including Dalmore Capital – backed in part by investors from the UK’s Pension Infrastructure Platform – and insurers Allianz and Swiss Life, and has won the bid to fund a £4.2bn (€5.9bn) infrastructure project in London.
The Bazalgette Tunnel consortium, which also includes listed company International Public Partnerships, and fund managers DIF and Amber Infrastructure Group, is the preferred bidder for the Thames Tideway Tunnel (TTT) licence by Thames Water after 12 parties tendered for the contract.
Dalmore secured £440m of commitments from UK pension funds and European investors for the project, an upgrade of London’s ageing sewer network.
IPE understands PIP investors account for the majority of the UK commitments. Earlier this month, PIP investors made a £370m co-investment with Dalmore.
The PIP, set up by the UK National Association of Pension Funds (NAPF) to channel investment into UK infrastructure, declined to comment.
For the PIP, any involvement in this fund represents its first foray into UK development infrastructure, after focusing on PPP equity and solar investments.
Mike Weston, chief executive of the Pensions Infrastructure Platform (PIP), recently told IP Real Estate that bidding for projects such as the tunnel is a “much more involved process than buying a share in Marks & Spencer or Tesco”.
For investors to get to the point where they can bid for such projects, pension funds, he said, have to commission and evaluate reams of expert opinions. “Essentially, each infrastructure asset is unique and there is a lot of due diligence to do, and a lot of frictional costs involved,” he said.
Weston admitted discussions around the TTT had taken place earlier this year.
Dalmore was the first asset manager to invest PIP money via a series of public/private partnership (PPP) equity investments.
Paris-based listed asset manager International Public Partnerships will invest £210m in the 25km project, which will run across London below the Thames.
The amount of equity being invested by other members of the consortium was not disclosed.
Christian Fingerle, chief investment officer responsible for infrastructure investments at Allianz Capital Partners, said the insurer is “convinced” that the project will modernise London’s “essential infrastructure”.
Construction of the £4.2bn project has been divided geographically, with the west of the tunnel given to a joint venture of BAM Nuttall, Morgan Sindall and Balfour Beatty Group. A Ferrovial Agroman and Laing O’Rourke joint venture will develop the central tunnel, while Costain Vinci Construction Grands Projects Bachy Soletanche has been awarded the east contract.
The UK government approved plans for the tunnel in September last year, with local environmental bodies backing the project.
