Hermes Infrastructure and the Canada Pension Plan Investment Board (CPPIB) have jointly acquired a 30% stake in a UK port operator, with the former adding to its recent rail asset purchase.
The infrastructure fund, part of Hermes Investment Management, has partnered with a Canadian outfit for the second time in a month after .
It has now jointly agreed with CPPIB to take a 拢1.6bn stake (30%) in Associated British Ports (ABP), a UK port operator controlling 21 separate facilities in the UK.
Hermes鈥� owner, the 拢40.2bn BT Pension Scheme, seeded the infrastructure fund , and local government pension schemes (LGPS) for Dorset (拢2.1bn), Cornwall (拢1.4bn) and Barking and Dagenham (拢654m).
Peter Hofbauer, head of Hermes Infrastructure, said the manager had been looking to take a stake in ABP since 2013.
鈥淲e always viewed the UK landlord port model as attractive for investors,鈥� Hofbauer said.
In the UK, the port landlord manages the port and owns the land around it.
Hofbauer said ABP鈥檚 earnings derived mainly from leasing the land and fulfilling its statutory duties, which means the volatility of earnings tends to be lower than for other international port assets that have volume risk.
鈥淣ot only do you have a real estate element to the business, and the statutory element, a lot of customers also take on volume risk through guaranteed revenues, which, when added up, means a lot of the company鈥檚 earnings are guaranteed,鈥� he said.
Santander director of pensions Antony Barker said the bank鈥檚 pension fund allocated 拢50m, through a segregated mandate with Hermes, to what he described as a 鈥渧ery good core asset鈥�.
鈥淎BP supports 84,000 jobs and so contributes billions to the UK economy,鈥� he said.
鈥淢ore importantly, the company weathered the recent years of economic volatility and the downturn very well. With all the uncertainty over markets, there鈥檚 a lot to be said for having a safe haven, or 21.鈥�
CPPIB, which now has more than 拢7.6bn invested in the UK, said ABP provided a unique opportunity for exposure to port assets with steady operational performance.
Managing director and global head of infrastructure Cressida Hogg added: 鈥淭his investment is an important addition to our global infrastructure portfolio and fits well with CPPIB鈥檚 long-term investment mandate.鈥�
Hermes and CPPIB take the 30% stake off GS Infrastructure Partners and Infracapital, the infrastructure arm of M&G Investments.
Remaining shareholders include Borealis Infrastructure and the Government of Singapore Investment Corporation (GIC).
Hofbauer said the asset fit into the fund鈥檚 core asset allocation strategy, which focuses on low risk, low volatility, inflation protection and a cash yield.
The Eurostar deal announced earlier this month formed part of the value-added allocation given its exposure to GDP movements.
