This transaction will see Sun Life take an 80% stake in InfraRed for a consideration that includes a payment of £300m (US$390m) with a put and call option for the InfraRed owners’ remaining equity interest, exercisable after four and five years respectively.
This deal represents a key milestone in InfraRed’s evolution and will drive the next phase of growth securing InfraRed’s place among a small group of leading global investment platforms as the real asset markets continue to grow and institutionalise.
InfraRed has built an enviable track record as an international developer and steward of core infrastructure, renewables and real estate over the past 30 years. During 2019, the company has been exploring ways to sustain its track record of growth, with a focus on the rapidly growing renewable energy infrastructure market. This process identified a substantial opportunity for expansion in North America, an opportunity that is being driven by two key trends : the emergence of rigorous decarbonisation targets needed to tackle climate change; and the reduction in the cost of renewable technologies, which are becoming competitive with conventional generation. Matched with Sun Life’s distribution capabilities, access to capital and its focus on driving responsible investment, InfraRed’s expertise and experience in this sector provides for a compelling growth opportunity and the next phase of InfraRed’s development.
Backed by seed capital from Sun Life of US$400m, which will support the launch of new funds including a new North American renewable infrastructure fund, the partnership and new products will transform InfraRed’s North American capability. It will build upon the company’s execution-only US platform to create a fully-fledged North American infrastructure fund management business. This will be supported by SLC Management’s distribution capabilities, with access to new investment opportunities and capital.
Werner von Guionneau CEO of InfraRed commented:
“I am delighted to announce this transaction with Sun Life and SLC Management which enables us to drive the growth of our business in the Americas, in particular the renewable energy market. This transaction comes after we initiated discussions with a range of partners in order to drive the next stage of our growth. SLC Management and InfraRed have complementary capabilities, a similar culture of collaboration, integrity and long-termism, and proven track records of delivery. For existing employees, investors, funds and partners it is business as usual with management, resources and support remaining unaffected. There will also be no change to any of InfraRed’s funds.
“InfraRed has grown to become a leading international infrastructure investor. To build on this success our ambition is to continually evolve so that we maximise the potential of our capabilities and address the exciting market opportunities we see in infrastructure overall and particularly around the transition to decarbonise energy. Joining forces is the perfect way to do this and the InfraRed management team and I look forward to working closely with SLC Management and Sun Life to realise our ambitions.”
InfraRed will retain its management structure, operating as a business within SLC Management’s portfolio. SLC Management has a proven track record as a successful steward of investment managers.
“We’re excited to acquire a majority position in InfraRed, which further diversifies SLC Management’s alternative solutions to now include infrastructure equity,” said Steve Peacher, President, SLC Management. “InfraRed is a leader in global infrastructure investing in both greenfield and brownfield projects, including renewable energy. These investments have historically provided the type of returns that institutional clients are seeking.”
Peacher added: “We established SLC Management in 2014 to develop a line-up of fixed income and alternative strategies to help institutional investors meet their obligations, similar to how we invest our own general account at Sun Life. InfraRed’s proven investment capabilities in infrastructure are a natural extension of SLC’s solution set. There is also a strong cultural fit between the two firms.”
The transaction is expected to close during the first half of 2020, subject to receipt of regulatory approvals and satisfaction of customary closing conditions.
Ardea Partners International LLP acted as financial advisor to InfraRed in connection with the transaction, and Weil, Gotshal & Manges LLP served as InfraRed’s legal counsel.
Fenchurch Advisory Partners served as Sun Life’s financial advisor on the transaction, and its legal counsel was Skadden, Arps, Slate, Meagher & Flom LLP.
About InfraRed Capital Partners
InfraRed Capital Partners is an international investment manager focused on infrastructure and real estate. It operates worldwide from offices in London, Hong Kong, New York, Sydney, Seoul and Mexico City. With more than 175 professionals, it manages US$12bn of equity capital in multiple private and listed funds, primarily for institutional investors across the globe. InfraRed Capital Partners is authorised and regulated in the UK by the Financial Conduct Authority.
InfraRed implements best-in-class practices to underpin asset management and investment decisions, promotes ethical behaviour and has established community engagement initiatives to support good causes in the wider community. InfraRed has been a signatory of the Principles of Responsible Investment since 2011 and has been awarded triple A+ score in 2019 PRI assessment.
Over the past 30 years InfraRed has, initially within Charterhouse Bank then at HSBC and latterly independently, established itself as a highly successful developer and custodian of core infrastructure, renewable energy and real-estate assets that play a vital role in supporting sustainable communities.
For more information go to www.ircp.com
About Sun Life
Sun Life is a leading international financial services organization providing insurance, wealth and asset management solutions to individual and corporate clients. Sun Life has operations in a number of markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia and Bermuda. As of September 30, 2019, Sun Life had total assets under management of C$1,063 billion. For more information please visit www.sunlife.com.
Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under the ticker symbol SLF.
About SLC Management
SLC Management is the brand name for the institutional asset management business of Sun Life Financial Inc. under which Prime Advisors, Inc., Ryan Labs Asset Management Inc., and Sun Life Capital Management (U.S.) LLC in the United States, and Sun Life Capital Management (Canada) Inc. in Canada operate. Additionally, the SLC Management brand includes the investment division and General Account of Sun Life Assurance Company of Canada.
As of September 30, 2019, SLC Management’s collective operations, including Sun Life’s general account, have assets under management of C$227 billion (US$171 billion).
