Equitix sale in final stage with strong US interest
3rd April 2025 08:48 AM
By Nick Roumpis, Brendan Malkin and Stefano Berra
The sale by Tetragon Financial Group of its majority stake in Equitix is in its final round with mainly US investors targeting the UK infrastructure fund manager.
Sources said that at least four investors, comprising Franklin Templeton, Barings, Prudential and alternative asset manager Hunter Point Capital (HPC), have been involved in the final bidding round in recent weeks.
Two of the sources said that Euronext Amsterdam-listed Tetragon, which is advised by Bank of America, has entered into exclusive talks with a bidder, with one of the sources adding that this is Franklin Templeton.
Franklin Templeton has mainly invested in the past in social infrastructure assets via its dedicated strategy, the Franklin Templeton Social Infrastructure Fund.
The San Mateo, California-headquartered firm manages over USD 250bn of alternative assets globally across equity, fixed income and alternative assets.
Looking to further increase its infrastructure exposure, Franklin Templeton launched last August a new infrastructure debt fund, to be led by Will Devenney, a former managing partner at Power Sustainable Infrastructure Europe and the previous head of Legal & General Investment Management’s debt platform.
The other bidders also involved in the sale of Equitix, which accounts for 26.3% of Tetragon’s total investments and is by far its largest single investment, also have ties with the infrastructure industry.
Prudential was the parent company of M&G, which owns infrastructure fund manager Infracapital, until 2019, when the two companies demerged.
HPC, which is also involved in the final round of the Equitix sale, invests in GPs, but mainly targets minority stakes.
The US investment firm raised last year USD 3.3bn for its inaugural GP Stakes fund (HPC Fund I) to target further investments in GPs across infrastructure, private equity, private credit and real estate.
Barings, which had USD 11bn of assets under management as of the end of 2024, launched its infrastructure debt platform in 2013, and has since made investments worth over USD 22bn, according to its website.
Equitix, which has over 360 assets valued at some USD 14bn across 22 countries, generated adjusted EBITDA for 2023 of GBP 110.6m with a 53% margin, sources said.
BlackRock created one of the world’s largest infrastructure managers with a USD 12.5bn deal to acquire GIP, with the takeover price representing a multiple of about 25-29x on GIP’s fee-related earnings expected for 2024.
EBITDA multiples for infrastructure managers have dropped since their high point with the GIP-BlackRock deal, largely due to the challenging fundraising environment amidst continuing high interest rates, sources said.
Alternative asset manager CVC agreed to acquire DIF in September 2023 for around EUR 1bn, paying an 11x multiple on the manager’s management fee earnings – a similar measure to EBITDA for GPs – of EUR 91m in 2023.
Tetragon reported the net asset value of its holding in Equitix at USD 922.4m, as of 31 December 2024, a 25% rise year-on-year.
KKR Infrastructure in 2021 took private John Laing in a deal valuing the business at about GBP 2bn, a 35% premium to its then adjusted net asset value. Equitix backed the deal by taking a stake in a PPP portfolio of John Laing.
Tetragon, which bought Equitix in 2014 for an enterprise value of GBP 159.5m from investor Cabot Square Capital, also saw its performance and success fees grow by USD 62.4m last year, driven primarily by an increase in performance fee income earned by Equitix and another UK alternative investment firm it owns, Acasta Partners.
Equitix, which is currently fundraising for its seventh UK-focused fund, has agreed a flurry of acquisitions recently including Greenlink, the Seagreen Phase 1 offshore transmission assets and NatWest pension fund’s operational onshore wind farms in the UK.
Investors from North America have previously targeted large European infrastructure platforms.
London-based Amber Infrastructure merged last year with US real estate and fixed income investor Boyd Watterson Asset Management, creating a combined business with USD 35.7bn of assets in infrastructure, real estate and fixed income.
Canada’s Sun Life Financial acquired in 2020 a majority stake in InfraRed Capital Partners, in a deal including a closing payment of GBP 300m and investment commitments of USD 400m to support the launch of new funds.
Franklin Templeton, Bank of America, Barings and HPC declined to comment. Equitix, Tetragon and Prudential did not respond to requests for comment.