ING drops fund for investors in infrastructure
Ambitious scheme launched last year fails to attract sufficient critical mass in volatile market
Sunday 16 August 2009
ING, the Dutch insurance conglomerate, has pulled its €1bn (£860m) European Infrastructure Fund (EIF) having failed to attract enough investors.
The fund was launched last year, when it was seeded with two existing ING investments. These were a 29 per cent stake in Welcome Break, the motorway services company, and a 24.9 per cent share of a wind farm project in Holland.
Richard Games, the head of the fund, said at the time that infrastructure assets were a strong investment in the current volatile market, as they provide stable returns.
However, in a statement this weekend, ING said: "Due to a combination of market conditions, concerns over achievable critical mass and our strategy for taking the business forward, we have, sadly, decided to discontinue with the marketing of the ING EIF."
The company has not yet decided what to do with the Welcome Break and wind farm stakes, but added that it would "be working with prospective investors" on options for purchasing infrastructure.
ING is understood to be in talks with the team running the fund over their futures. Mr Games was formerly head of infrastructure at WestLB, the €290bn international bank. ING praised his team for having "worked so hard towards" the fund's launch.
A market source said that ING had already tried to scale back its ambitions to create a €300m fund, but was no more successful in hitting this more modest target.
Though ING insisted that infrastructure remained "a sound investment", similar funds to EIF have also been struggling. Last autumn, Bank of Ireland decided against going ahead with an infrastructure fund believed to have been targeted at €300m to €400m, even though about €100m had already been raised.
A member of that team, investment director Mike Bryan, has since moved to the Treasury as a project finance specialist in the infrastructure finance unit. Prior to his year at Bank of Ireland, Mr Bryan was head of infrastructure at Dutch merchant bank NIBC.
A leading infrastructure fund manager said: "Companies started setting up these funds thinking it was easy, but raising the investment is actually quite hard."
Michael Ryan, a former managing director at infrastructure investor I2, is returning to the sector. He is aiming to complete a £300m fundraising with two former colleagues by early next year.
Several big names in the sector are turning their hands to renewable energy assets. Barry Williams, the co-founder of the Secondary Market Infrastructure Fund, recently set up Aleltho Energy with Perry Noble, the former co-head of the global finance practices at law firm Freshfields.
The company will invest up to £30m in any one renewable energy asset, and signed its first memorandum of understanding with a company last week. On Thursday, Aleltho announced a deal with ITI Energy, a manufacturer of thermal conversion technology.
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