Patrizia Infrastructure has invested €140m (£122m) in Selettra Illuminazione Pubblica, via its Smart City Infrastructure Fund (SCIF) – the single limited partner fund with Dutch pension giant APG.

Selettra, founded in 1990, is the second-biggest independent smart streetlighting company in Italy by number of light points managed.

The transaction follows SCIF’s first smart streetlighting investment in Europe, when it purchased Ottima in early October, and creates a €180m portfolio of smart streetlighting companies for the €750m fund.

Patrizia said the transactions grow SCIF’s footprint in the sector and establish an experienced technical and business development team with strong municipality connections in a new region.

As a part of the investment, SCIF has committed additional growth capex to further develop Selettra.

Selettra designs, redevelops, installs, finances and manages connected lighting points. Historically, it has been focused on southern Italy but has recently expanded to include the north of the country. It is currently rolling out two additional smart city business lines connected to the development of renewable energy communities and the roll-out of 5G small cells.

Matteo Andreoletti

Matteo Andreoletti

Matteo Andreoletti, head of infrastructure equity, Europe and North America at Patrizia, said: “This latest deal in Italy was a compelling investment opportunity – both in its own right as well as through its ability to create a major smart streetlighting portfolio for SCIF in Italy following the recent acquisition of Ottima.

“Not only is smart streetlighting important for addressing challenges around decarbonisation and digitalisation, it is a core infrastructure product that offers our investors attractive risk-adjusted returns and inflation protection. We are excited to continue our track record of investments that enable smarter cities through real assets.”

Andreoletti added that smart streetlighting is a significant contributor to the European Union’s policy objectives on energy efficiency and reduction of carbon emissions.

He said: “Italy is one of the highest consumers of public lighting in the EU due to its existing network of overpowered lamps containing 150W lightbulbs, while it has the second-highest number of lighting points.

“By upgrading its streetlights with the latest LED technology, towns can achieve energy savings of more than 50% and minimise the release of harmful substances from their communities, such as ultraviolet radiations and CO2 emissions.”

Andreoletti explained that SCIP is focused on further opportunities in Italy’s 7,800 towns with populations of around 50,000.

He said: “There is what I call an infrastructure divide of large cities versus small cities in Italy. So one of the key features of this fund is to is to have a positive impact on the country where we invest.

“The second part of what is key to this fund is that returns tend to be correlated with inflation. So through this product, we are providing an attractive inflation-linked return to the underlying investors.

To read the latest edition of the latest IPE Real Assets magazine click here.