September 6 (Preqin News) – European private asset investment firm Bridgepoint Group is set to expand its infrastructure investment capabilities with the £835mn ($1.05bn) acquisition of US energy transition specialist, Energy Capital Partners.
Middle-market focused Bridgepoint, which has more than $40bn assets under management, said as it announced the deal on Wednesday that the move would expose it to global decarbonisation efforts, where investment is forecast to reach $1.9tn annually through 2050. Having specialised in private equity and private debt, the deal adds a ‘significant third pillar’ to its business, Bridgepoint said.
New Jersey-headquartered ECP, founded in 2005 and with AUM of $18.6bn, invests in areas including power generation, renewables, storage, and environmental infrastructure. Its leadership and investment team will continue to run the ECP business, according to the announcement.
The tie-up is the latest consolidation in a sector that stands to benefit from policymaker efforts to develop clean energy and infrastructure. It comes a day after alternatives investment manager CVC announced its entry into the infrastructure space by acquiring a majority stake in Amsterdam-based fund manager, DIF Capital Partners.
Climate change, global energy politics and geopolitical tensions are spurring governments to push for development of alternative, less carbon-intensive energy sources, as well as driving infrastructure expansion amid a push to ‘reshore’ manufacturing in strategically important industries.
The most comprehensive measures have been unveiled by the US, where recent government fiscal support includes the Infrastructure Investment and Jobs Act of 2021 ($1.2tn), the Inflation Reduction Act (IRA) of 2022 ($400bn), and the CHIPS (Creating Helpful Incentives to Produce Semiconductors) Act of 2022 ($53bn). All promise potentially significant opportunities for cleantech, in which infrastructure fundraising dominates.
Pressure is mounting for an EU response to provide opportunities on the other side of the Atlantic, particularly as the continent continues to wrestle with energy disruption stemming from the war in Ukraine. Whether the EU will decide to compete with the US remains uncertain although, as outlined in Preqin’s Alternatives in Europe 2023, urgency around decarbonization will drive investment, be it market or state-driven.
Amid tougher fundraising conditions, many private asset managers are seeking to broaden the investment options they are able to offer clients. By branching into infrastructure, the Bridgepoint and CVC acquisitions reflect the asset class’s maturation, said Alex Murray, VP, Head of Real Assets, Research Insights, at Preqin.
'Consolidation across private markets is anticipated as a more challenging environment emerges, following a period of rapid monetary tightening', he said. ‘The expansion of platforms across the alternatives industry can deliver efficiencies, but also will help institutional investors more easily access asset classes into which they are looking to expand.'
Infrastructure funds raised a record $175.2bn aggregate capital in 2022, according to Preqin data, despite the number of funds dropping to 141, the lowest level since 2014. So far this year 46 funds have raised $18.1bn of aggregate capital. There are currently 547 funds in market, with an aggregate target size of $522bn.