Infrastructure debt

Infrastructure Debt Fund

Overview

  • One of the world’s most experienced subordinated debt arrangers and investors.
  • Market leading team, attractive market environment and strong deal flow provide the potential to generate attractive cash yield focused returns for investors

Proven infrastructure debt track record with a high cash yield

  • The investment team has invested US$1,786.6 million* in 38 infrastructure debt transactions since 2001
  • These investments have generated an IRR of 9.9%* and a cash yield of 10.1%*

Deep and experienced investment team which has generated consistent returns through economic cycles

  • One of the world’s most experienced subordinated infrastructure debt arrangers and investors
  • Based in London, Sydney and New York, the team has more than 125 years of combined industry experience with strong backgrounds in investment banking and project finance
  • The investment team has been responsible for each of the investments in the track record
  • Investment team ability to draw on AMP Capital’s scale, widespread resources, brand and extensive network is a unique competitive advantage
    - Research and due diligence support and resources
    - Generating investment opportunities through deal flow

Attractive market opportunity for experienced infrastructure debt providers

  • Increasing demand for infrastructure investment in developed markets (OECD)
  • Large pools of infrastructure equity capital have been raised to supplement public investment
  • There has been a marked decline in the providers of debt capital since the global financial crisis
  • Large number of longer-term holders of infrastructure debt securities become forced sellers opening opportunities to purchase performing assets at discount

Benefits of infrastructure debt

Investor objectives Infrastructure debt features
Consistent, high cash yield - Earns cash coupons from highly cash generative businesses that form the backbone of an economy
-Fixed margin over a floating cash rate
Capital stability / persistency of returns - Better position in the capital structure
- Ranks ahead of equity in the event of a wind-up
Low correlation with equity and fixed income asset classes - Target monopolistic assets with low competitive risk and low correlation to GDP
Asset / Liability matching - Typical asset duration is 5 years
- Locks in margins providing a match for cash distributions

 

 

Strategy

Infrastructure Debt Fund II Strategy Overview

AMP Capital acts as a lead arranger or cornerstone investor in the majority of our infrastructure debt investments. The investment team focus on adding value through originating, structuring and leading pricing terms and discussions, seeking cash distributions that are higher than historical levels in today’s market and managing credit risk through ensuring secured rights and downside protections.

The team leverages an extensive global network of contacts with both issuers and underwriters of private infrastructure debt.

The key components of investment strategy and focus:

Focus on defensive, non-cyclical cash flow producing assets

  • Essential service assets
  • Cash yielding assets

Targeting debt investments of US$67 million – US$100 million

  • Expect an average hold period of five years

Diversified portfolio of 10-15 investments

  • Diversification across industry, sector and geography
  • Focus on infrastructure businesses in developed countries

Focus on lead arranging or cornerstone role in primary market investments

  • Will participate in transactions that meet investment criteria
  • Retain an opportunistic strategy towards secondary asset purchase to take advantage of market conditions

 

Competitive advantages

Focus on arranging

  • 65% of investments by invested capital held role of arranger (47%) or cornerstone investor (18%)
  • Negotiated coupons and significant upfront fees and prepayment premiums

Strong deal flow

  • Extensive global network of contacts and strong presence in the secondary market
  • “Unified Investment House” culture means the team can draw on the collective expertise of over 240 investment professionals

Thorough investment process

  • Discussions with other lenders on amendments to terms
  • Bottom-up & top-down analysis of each investment opportunity

Proactive portfolio management

  • Access to senior management
  • Discuss projections/budgets, performance, covenant headroom; strategic plans and equity injections, if required

For more information, download the Infrastructure Debt Fund II Strategy by Sector and Geography (PDF 92 KB).

Investment team

 

Andrew Jones

Andrew Jones

Managing Director, Infrastructure Debt

Andrew Jones is responsible for leading AMP Capital’s infrastructure debt activities globally. Mr Jones has over 25 years of experience in the industry, and joined the investment team in January 2000. Mr Jones has significant experience sourcing, arranging and managing infrastructure debt assets in all of the target markets of the Fund. From 2004 to 2010, he was a member of AMP Capital’s Infrastructure Investment Committee which considered equity investments for AMP Capital’s infrastructure equity investments. Prior to joining AMP Capital, Mr Jones held senior roles within the project finance teams at National Australia Bank and National Westminster Bank’s Australian operations. Mr Jones holds a Bachelor of Arts in Economics from Flinders University (Australia) and is a Member of AMP Capital’s Infrastructure Debt Investment Committee.

^ Top

Gerry Jennings

Gerry Jennings

Principal, Infrastructure Debt

Gerry Jennings joined the Investment Team in October 2005. Mr Jennings is responsible for sourcing and managing a portfolio of sub-investment grade assets in the European market, including regulated infrastructure utilities (water, gas and airports), ports and infrastructure service assets. He also manages relationships with European sponsors and international banks for AMP Capital. Mr Jennings brings over 22 years of private equity and leveraged market experience to the role, most recently as Senior Manager of private equity at Ahli United Bank. Mr Jennings was also Director of leveraged finance at Mizuho, where he was responsible for large sub-underwriting and co-arranging debt transactions in the UK and Europe. Prior to that, Mr Jennings spent several years with the HSBC Group in a variety of leveraged and private equity roles. Mr Jennings holds a Masters of Business Administration and a Diploma of Management from Henley Management College (UK), as well as a Certified Diploma in Accounting and Finance from the Association of Certified Chartered Accountants (ACCA) (UK) and is a Member of AMP Capital’s Infrastructure Debt Investment Committee.

^ Top

Richard Lane

Richard Lane

Principal, Infrastructure Debt

Richard Lane joined the Investment Team in the London office in June 2010. Mr Lane is primarily responsible for sourcing, arranging and managing infrastructure debt investments in Europe. He has over 17 years of corporate banking, infrastructure finance and private equity experience. Prior to joining AMP Capital, Mr Lane held senior roles at Kier Project Investments, Dexia UK and The Royal Bank of Scotland Group. Mr Lane brings significant additional arranging experience to the Investment Team, having been responsible during his banking career for a number of market leading project finance and infrastructure acquisition transactions. Mr Lane has played a key role in arranging debt finance for transactions with an aggregate enterprise value in excess of €10 billion, across a broad range of infrastructure of sectors. Mr Lane holds a Bachelor of Arts in Financial Economics and is a member of AMP Capital’s Infrastructure Debt Investment Committee.

^ Top

Simon La Greca

Simon La Greca

Principal, Infrastructure Debt

Simon La Greca joined the Investment Team in May 2003. Mr La Greca is responsible for sourcing, arranging and managing infrastructure debt investments in the Asia Pacific region and the US. This involves managing relationships with equity sponsors, undertaking financial structuring and debt sizing, coordinating detailed due diligence, including financial modeling, industry and market analysis, and obtaining investment approval. Prior to joining AMP Capital, Mr La Greca was Manager of Project and Leveraged Finance within the global investment banking division of Deutsche Bank for three years. Mr La Greca has over 12 years of relevant market experience, including nine years at AMP Capital. Mr La Greca holds a Bachelor of Business in Banking and Finance from Monash University (Australia) and is a Member of AMP Capital’s Infrastructure Debt Investment Committee.

^ Top

Patrick Trears

Patrick Trears

Director

Patrick Trears commenced with the Infrastructure Debt Team in December 2012. Mr Trears is based at AMP Capital’s New York office and is responsible for the sourcing and managing of infrastructure debt assets in the Americas. Mr Trears has over 12 years industry experience and joined AMP Capital from WestLB, where he was responsible for project and acquisition finance transactions in the Americas, supporting strategic financial sponsors. Prior to this, he held structured and project finance positions at Hypo Real Estate, Citi Investment Bank and DEPFA Bank (Ireland). Mr Trears holds a Bachelor of Commerce (Economics and Finance) (Honours) from University College Dublin, Ireland, and is currently studying for the CFA qualification.
 

^ Top

Tim Whishaw

Tim Whishaw

Associate Director

Tim Whishaw joined the Investment Team in London in May 2007. Mr Whishaw is responsible for originating and managing a portfolio of assets in the utilities, transport and infrastructure service sectors in Europe. The role involves conducting detailed due diligence, credit analysis and financial modelling on prospective new deals, as well as actively managing existing assets. Mr Whishaw joined AMP Capital from the Bank of Scotland where he was a member of the project and infrastructure origination team. This involved working on a diverse range of transactions in the infrastructure, energy and natural resources sectors. Prior to that, Mr Whishaw spent several years as a Business Analyst in the insurance and investment division of HBOS Australia. Mr Whishaw holds a Bachelor of Economics from the University of Western Australia, and a Graduate Diploma in Applied Finance and Investment from the Financial Services Institute of Australia.

^ Top

Annette Bannister

Annette Bannister

Associate Director

Annette Bannister commenced with the Investment Team in the London Office in January 2011. Ms Bannister assists with sourcing and managing of infrastructure debt assets in Europe. Prior to joining AMP Capital, Ms Bannister’s most recent role was in the Power, Utilities and Infrastructure Investment Banking Team at Barclays Capital. In that role, Ms Bannister worked on a wide range of project, acquisition and corporate finance transactions in the infrastructure sector. Prior to Barclays Capital, Ms Bannister worked in the Energy Project Finance Team at Société Generale. Ms Bannister holds a Bachelor of Arts with Honours in Business Finance and a Masters of Science (Finance and Investment), both from the University of Durham (UK).

 

^ Top

Spencer Ivey

Spencer Ivey

Fund Controller

Spencer Ivey moved to his current role in May 2011 and is responsible for supporting the Investment Team in controlling the various operational aspects of the Investment Team and its funds. This includes oversight of key support functions such as investment finance, accounting, compliance, legal, tax, debt advisory, performance analysis and client reporting. Mr Ivey has 10 years experience in funds management and financial services. Mr Ivey previously worked in the Investment Finance team at AMP Capital, most recently as a Fund Advice Manager, where he was responsible for managing the delivery of advice and finance reports for the Infrastructure, Private Equity and International managed funds. Prior to joining AMP Capital in 2006, Mr Ivey worked in Chartered Accounting and Project Finance roles in Australia and the UK. Mr Ivey holds a Bachelor of Commerce from the University of Sydney (Australia) and is a qualified Chartered Accountant.

 

^ Top

Case studies

Power: Invenergy

 

Deal Summary  
Industry: Power - Wind
Deal status: Unrealised
AMP Capital role: Clubbed primary deal
Debt tranche Senior Hold Co
Geography USA, Canada, Poland
 

Business description

  • Invenergy is the largest independently-owned wind energy company in North America
  • The Company owns a diverse pool of 25 wind farm projects across the United States, Canada and Poland, with 2,695 MW in operation and under construction
  • The projects benefit from stable, contracted cashflows, with Power Purchase Agreements (PPAs) or hedges in place with investment grade counterparts across around 90% of the portfolio, with an average contract life of 18 years
  • Proven turbine technologies with an average portfolio availability of 96.7% since inception
  • Accurate forecasting analysis means that historical wind performance has been 100.8% of the initial P50 forecast across the portfolio since inception

Airports: BAA

Deal Summary  
Industry: Airports
Deal status: Unrealised
AMP Capital role: Arranger
Debt tranche Subordinated
Geography UK
 

Business description

  • Pre-eminent airports operator owning the key regulated infrastructure assets of London Heathrow, which is the UK’s only hub airport, and London Stansted which is a major airport for low-cost carriers.
  • The airports generate diversified revenue streams including landing charges from airlines, rents from shops, income from car parks and advertising, the rental of premises at the airports such as aircraft hangars, cargo, maintenance and office facilities, baggage handling and passenger check-in.
  • The company operates under a strong and stable regulatory framework set by the CAA which has been in place since privatisation of the industry in 1986.

Rail: Porterbrook

Deal Summary  
Industry: Transportation - Rail
Deal status: Unrealised
AMP Capital role: Secondary purchase
Debt tranche Subordinated
Geography UK
 

Business description

  • The Porterbrook Partnership is a leading UK rolling stock operating company with market share of approximately 32% of the UK passenger train leasing market by number of vehicles
  • The Group enters into long–term operating leases to supply a diverse range of passenger rolling stock, including regional, commuter and high speed passenger trains to train operating companies, and freight locomotives and wagons to freight operating companies
  • Since privatisation in 1994 the business has benefitted from a stable regulatory environment and strong support from the Department of Transport in the event of lease insolvency through the Railways Act 1993. There is also strong political support to promote the use of trains

Water: Southern Water

Deal Summary  
Industry: Utilities - Water
Deal status: Unrealised
AMP Capital role: Secondary purchase
Debt tranche Subordinated
Geography UK
 

Business description

  • Southern Water is a major water and sewage company in the UK providing water to c.1 million properties and sewage services to c.1.8m properties in its operating region in the South of England
  • The company operates under a strong and stable regulatory framework set by Ofwat which has been in place since privatisation of the industry in 1989
  • Regulated Capital Value (“RCV”) at 31st March 2011: £3,756.6 million

Broadcast Towers: Digita

 

Deal Summary  
Industry: Broadcast Towers
Deal status: Unrealised
AMP Capital role: Primary Arranging Role
Debt tranche Subordinated
Geography Finland
 

Business description

  • Based in Helsinki, Finland, Digita is the No1 provider of broadcasting & telecom tower infrastructure services, operating 598 sites covering up to 99.96% of the Finnish population with Digital Terrestrial Television (DTT) and 100% population coverage with FM Radio.
  • Digita owns the only network covering the whole of Finland and enjoys a monopolistic position with c.95% share of Finnish (DTT) television broadcasting and a c.97% share in Finnish radio broadcasting
  • Digita’s business operates within a well defined and regulated framework provided by the Finnish Communications Regulatory Authority (FICORA), operating under the supervision of the Finnish Ministry of Transport and Communication and Finnish Government legislation.
  • Proven turbine technologies with an average portfolio availability of 96.7% since inception
  • Digita owns the network license to broadcast DTT signals for 5 of the existing 10 multiplexes in Finland, broadcasting 36 channels including the top 5 national stations with an 80% combined audience share.

Track record

We have a successful track record of investing in infrastructure debt globally across full market cycles, with a focus on consistent cash yielding returns for investors.

AMP Capital Infrastructure Debt Fund I portfolio, as of 31 December, 2012 in US$ millions

  Number of Investments Average holding period (years) Amount invested (US$) Realised proceeds and unrealised value (US$) Cash yield Gross RR
Realised 0 n/a n/a n/a n/a n/a
Unrealised 6 1.0 285.2 311.5 9.0% 9.2%
Total 6 1.0 285.2 311.5 9.0% 9.2%

Prior track record, as of 30 June, 2012 in US$ millions

  Number of Investments Average holding period (years) Amount invested (US$) Realised proceeds and unrealised value (US$) Cash yield Gross RR
Realised 23 3.4 1,137.8 1,444.1 10.5% 10.0%
Unrealised 9 6.5 363.6 560.9 9.7% 9.9%
Total 32 4.9 1,501.4 2,005.0 10.0% 9.8%

 

Download detailed summary of investment performance at 31 December 2012. (PDF 75KB)

For more information on how to invest in the Infrastructure Debt Fund, please contact us.

Oliver's Insights

By Dr. Shane Oliver, Chief Economist and Head of Investment Strategy, AMP Capital


The death of 'risk on/risk off'?
23 May 2013
More Oliver's Insights
Download Infrastructure Brochure