Tuesday, October 9, 2018

PSP Acquires Forth Ports?

Private Capital Journal reports, PSP Investments acquires Forth Ports buying out Arcus:
Public Sector Pension Investment Board (PSP Investments) has acquired the majority stake (62.6%) held by Arcus European Infrastructure Fund 1 LP in Forth Ports Limited, one of the UK’s largest port groups.

Edinburgh, Scotland based Forth Ports owns and operates eight commercial ports on the Firth of Forth, the Firth of Tay and the Thames, with strategic positions in Tilbury (London), Grangemouth, Dundee, Rosyth and Leith (Edinburgh).

PSP Investments will partner with other long-term investors who are well aligned to support the future growth of Forth Ports.

Arcus first invested in Forth Ports in 2008 and along with PSP Investments took Forth Ports private for £751 million in 2011.


News Release

Forth Ports announces Arcus’ sale of its shares in the company to PSP Investments

Edinburgh, Scotland; London, England; and Montréal, Canada (October 3, 2018)

Forth Ports, one of the UK’s largest port groups, announces this morning that Arcus European Infrastructure Fund 1 LP (“Arcus”) has agreed to sell its shares in the company to the Public Sector Pension Investment Board (“PSP Investments”). After financial completion, PSP Investments will partner with other long-term investors who are well aligned to support the future growth of Forth Ports.

Forth Ports is a dynamic, UK-based multimodal ports owner and operator, with ports serving as logistical gateways across the UK, connecting the UK with Europe and the rest of the world. It owns and operates eight commercial ports on the Firth of Forth, the Firth of Tay and the Thames, with strategic positions in Tilbury (London), Grangemouth, Dundee, Rosyth and Leith (Edinburgh). Tilbury is the site of a major new port terminal, Tilbury 2, while the Port of Dundee is strongly positioned to service the needs of the growing offshore wind sector and North Sea oil and gas decommissioning industry.

“This is a landmark transaction for PSP to increase our stake in a strategically located, top-tier infrastructure asset in the UK,” said Patrick Samson, Managing Director and Head of Infrastructure Investments, PSP Investments. “Since PSP’s original investment seven years ago, Forth Ports’ world-class management team has led the company through consistent high performance and growth. We are now entering the next phase of our journey together, which includes a specific plan to enhance our asset management responsibilities. This plan is being headed by our London-based team under the leadership of Patrick Charbonneau, Managing Director, Infrastructure Investments (Europe).”

“This is an exciting time for Forth Ports as we continue to deliver our ambitious expansion and investment programme around the UK,” said Charles Hammond, Group Chief Executive of Forth Ports. “Our colleagues at PSP are already long-term, committed shareholders and this new investment ensures continuity for the business as we evolve to meet the customer demands of the future. I want to personally thank Stuart Gray, Simon Gray and all the team at Arcus for their constant support, insight and strategic guidance over the past seven years. Forth Ports is in a strong position with a clear vision for the future.”

“The Arcus team have been a long-term shareholder in Forth Ports and we leave the business in an excellent position, with a strong platform for continued growth,” said Stuart Gray, Arcus Partner. “We have enjoyed working in partnership with the management team, growing the business substantially during our period of ownership, and we will continue to monitor how the business evolves over the years with the new shareholding structure in place. We wish the management team every success for the future.”

Ends 3rd October, 2018


About Forth Ports
Forth Ports Limited is one of the UK’s largest port groups and owns and operates eight commercial ports in the UK – Tilbury on the Thames, Dundee on the Firth of Tay and six on the Firth of Forth – Leith, Grangemouth, Rosyth, Methil, Burntisland and Kirkcaldy. Within and around the Firths of Forth and Tay, Forth Ports manages and operates an area of 280 square miles of navigable waters, including two specialised marine terminals for oil and gas export and provides other marine services, such as towage and conservancy. www.forthports.co.uk @forthports

About Arcus Infrastructure Partners

Arcus Infrastructure Partners is an independent fund manager focussed solely on mid-market investments in European infrastructure. Arcus invests on behalf of institutional investors through discretionary funds and special co-investment vehicles and, through its subsidiaries, currently manages investments with an aggregate enterprise value in excess of €17bn (as of 30th June 2018). Arcus targets value-add infrastructure investments, with a particular focus on businesses in the transportation, energy and telecommunications sectors. www.arcusip.com

About PSP Investments

The Public Sector Pension Investment Board (PSP Investments) is one of Canada’s largest pension investment managers with C$153 billion of net assets as of 31st March, 2018. It manages a diversified global portfolio composed of investments in public financial markets, private equity, real estate, infrastructure, natural resources and private debt. Established in 1999, PSP Investments manages net contributions to the pension funds of the federal Public Service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Force. Headquartered in Ottawa, PSP Investments has its principal business office in Montréal and offices in New York and London. For more information, visit investpsp.com or follow us on Twitter and LinkedIn.
Patrick Samson, Managing Director and Head of Infrastructure Investments at PSP put it well:
“This is a landmark transaction for PSP to increase our stake in a strategically located, top-tier infrastructure asset in the UK. Since PSP’s original investment seven years ago, Forth Ports’ world-class management team has led the company through consistent high performance and growth. We are now entering the next phase of our journey together, which includes a specific plan to enhance our asset management responsibilities. This plan is being headed by our London-based team under the leadership of Patrick Charbonneau, Managing Director, Infrastructure Investments (Europe).” 
So PSP's Infrastructure team co-invested with Arcus Infrastructure Partners on this deal and now they are going to own a majority stake (63%).

The news release states that "after financial completion, PSP Investments will partner with other long-term investors who are well aligned to support the future growth of Forth Ports" but it doesn't specify which partners are coming in on this deal. It could be one of many large Canadian pension funds.

As far as Arcus, the release states: "Arcus invests on behalf of institutional investors through discretionary funds and special co-investment vehicles and, through its subsidiaries, currently manages investments with an aggregate enterprise value in excess of €17bn (as of 30th June 2018). Arcus targets value-add infrastructure investments, with a particular focus on businesses in the transportation, energy and telecommunications sectors."

Ports and airports are part of value-add infrastructure investments. Ontario Teachers' has a special team which manages airports for their plan. That's all they do. PSP also has a team managing airports and other infrastructure like ports.

It takes specialized knowledge to "add value" to these investments, specialization that these large pensions need to pay for if they are to realize their value creation plan.

I've never met Patrick Samson but a friend of mine who works at the Caisse has met him and told me he liked him a lot and he really knows his stuff.  I'm sure he and Patrick Charbonneau worked very hard on this deal and it is a good long-term deal for PSP.

Ports like all infrastructure assets are a long-term play on the economy. The more economic activity, the busier airports, ports, toll roads and other transportation assets are, the more they are worth to investors.

You still need to manage them properly and have a value plan to execute on your strategy and that's where specialized knowledge comes into play.

By the way, since I am talking about UK infrastructure, I wanted to mention that CBRE Caledon recently appointed a head of their new London office:
CBRE Caledon has hired Andreas Köttering to lead its newly established London office. Köttering will serve as Partner and Head of Infrastructure for Europe and be responsible for building a team in London to originate, execute and manage private European infrastructure investments for CBRE Caledon.

Köttering has more than 20 years’ experience in infrastructure. Prior to joining CBRE Caledon, he served as the Co-Head of Infrastructure-Europe for GIC. In this role, he oversaw the London-based team that was responsible for originating, executing and managing infrastructure investments in Europe. He also previously held senior infrastructure roles with the Canada Pension Plan Investment Board, Citi, Schroders and Siemens.

“Andreas is a well-respected leader and infrastructure investor, and we are delighted that he is taking on this significant role and leveraging his talent and expertise to build our London office and broaden our investment capabilities in Europe,” says Stephen Dowd, Principal, CBRE Caledon. “Europe has long been one of the most important markets for infrastructure investments, and CBRE Caledon has been an active participant in the European private infrastructure market since 2010. We believe that establishing a London office will enhance our ability to originate and execute on investment opportunities and manage our existing portfolio in Europe to continue to generate strong long-term performance for our clients.”
In June, CBRE Caledon completed a AU$90 million investment into joint venture that will acquire Origin Energy’s Acumen smart meter business and create Australia’s leading smart meter operator. You can read the details on this deal here.

Aaron Vale, Vice President at CBRE Caledon shared this with me: "In combination with the Australian smart meter co-investment we did, the London office shows how we help pensions build out their infrastructure and PE portfolios and are now expanding the team to include a European office."

I like Aaron, David Rogers and Stephen Dowd, think they are running a great shop and would highly recommend them to my institutional readers looking to invest intelligently in infrastructure.

Below, Shipping TV discusses the PSP Forth Ports deal. I also embedded an older clip where Lux magazine traveled to Edinburgh and spoke to Dr Derek McGlashan, energy and environment manager at Forth Ports in Leith, about how LED lighting - installed throughout the site - not only saved energy and money, but also secured the company a green award from the Edinburgh Chamber of Commerce. Very interesting discussions.

Update: PSP sold minority interests to UK-based GLIL Infrastructure, Australia’s First State Super and Construction and Building Unions Superannuation. No financial terms were released. The press release is available here.


No comments:

Post a Comment