Montagu shelves plans for €500m infra strategy to focus on PE

Last year, the UK-headquartered investor became the latest private equity firm to look to enter the infrastructure sector when it initiated plans to launch a new €500m European infrastructure fund.

It followed moves in recent years by private equity managers such as KKR, Blackstone and BlackRock to raise billions of dollars for new funds targeting investment in infrastructure assets.

But it is understood that Montagu, which declined to comment, has in recent weeks decided to cancel the launch of any inaugural dedicated infrastructure fund.

The decision follows a pre-marketing period last year that saw Montagu pitch its value-add infrastructure fund predominately to its existing institutional clients.

The manager had aimed to secure capital from a number of cornerstone investors to fund transactions on a deal-by-deal basis and build a seed portfolio for any future infrastructure fund, sources added.

But following a mixed response from investors and a desire not to have two competing strategies in the market, Montagu instead decided to focus on its €3bn fundraise for its sixth private equity fund.

To this end, it registered Montagu VI LP on the UK company register in late February and mandated Kirkland & Ellis to advise on legal aspects of the fundraise. The fund has a target of €3bn, according to sources. The GP has previously worked with placement agent Quest Fund Placement, but is understood to be doing the work for the sixth fund in house.

The PE team has completed three exits in the past year, according to Unquote Data. It generated a 19x multiple on the sale of former UBS division Equatex in May 2018, 5x on the sale of French drug maker Nemera to Astorg Private Equity in December and most recently divested its stake in med-tech firm Dutch Ophthalmic Research Center to Eurazeo earlier this month.

The transition from private equity to infrastructure investment has not always proven straightforward, with firms such as Oaktree and CVC Capital Partners suffering delays or opting to pull their infrastructure strategies altogether.

Montagu is, however, expected to formally launch a new fund – to be called Long-Term Strategic Assets (LTSA) – that will invest across several asset classes, including targeting businesses with "infrastructure-like" characteristics, according to sources.

It is understood that the new LTSA strategy will look to exploit synergies with Montagu's existing private equity team. During the mid-2000s, this team completed a number of transactions in the infrastructure sector, including an investment in UK waste businesses Cory Environmental and Biffa, as well as in transport businesses Unifeeder and Isle of Man ferry business Steam Packet, among others.

In recent months, the firm has also invested in UK software company Wireless Logistic Group, which provides businesses with specialist Internet-of-Things (IoT) and nachine-to-machine (M2M) platform services across mobile, satellite, low-power wireless and fixed-line networks.

The news about LTSA comes some nine months after Ronan Tunney joined Montagu from Alinda Capital Partners and six months after the appointment of Ramzi Moubarak from Morgan Stanley Infrastructure Partners.

Joining as directors within the investment team, the pair, who previously worked together at Macquarie, have been tasked with leading the firm's infrastructure strategy.

They have been joined by existing Montagu executives Thomas Lloyd Evans and Neil Graham, who together with a number of new hires form the firm's infrastructure team.

Montagu held a €2.75bn hard-cap close for its fifth private equity fund in June 2015, inside five months of launching the fund. The vehicle has made nine investments to date, according to Unquote Data.

With offices in London, Frankfurt, Paris, Luxembourg and Warsaw, the manager invests primarily in the UK, France, the DACH countries, the Nordic region, Poland and Benelux.

The firm specialises in management buyouts of companies with enterprise values ranging from €100m-1bn.

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• Topics
• Funds
• Infrastructure
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• UK / Ireland
• Montagu Private Equity