3i infra’s smaller projects team spins out

At a time when smaller infrastructure fund managers are being acquired by larger investment firms, the founders of Alba Infra Partners seem to be going against the current trend, spinning out of London-based private equity group 3i.

“The rationale of the spin-out is really strategic,” says Stéphane Grandguillaume, who until last week was a partner within 3i’s infrastructure team and is now CEO of the new entity.

“Our team is focusing on projects between €25 million and €75 million, while 3i’s flagship fund, 3iN [listed open-end fund 3i Infrastructure] focuses on deals between €200 million and €500 million.”

According to Grandguillaume, there is a significant market opportunity for infrastructure projects, a market segment that has been growing at an annual rate of 12 percent over the past decade and that continues to accelerate.

Targeting an underserved market

“There are more and more greenfield projects coming to the market; more and more developers,” says Grandguillaume. Multiple factors are driving this growth, including the energy transition, public deficits and a higher cost of capital. As a result, there are more projects requiring more equity.

“Also, there is significant demand for projects of this size, with this segment of the market being underserved, as infra funds have scaled up a lot and are not interested in investing in a €25 million equity ticket,” he says.

“We agreed with 3i that we wanted to continue serving this market, and they understood that to do that properly it would probably be cleaner to do it outside of 3i. We had this grown-up discussion with them, and we all agreed that the best way to retain the team and continue serving our partners was to do it as a new entity.”

Alba Infra Partners begins operations with offices in Paris and London, and with a team of 13 people – including John Cavill, who has assumed the role of CIO, and Antoine Matton, who serves as head of origination.

Establishing shot

“We are an established business,” Cavill points out. “We currently manage two funds with about €1 billion of AUM and across about 130 projects in Europe,” he says, referring to BIIF, a £680 million ($866 million; €798 million) yield-based PPP fund launched in 2008 with a 15-year fund life, according to 3i’s website; and EOPF, a €456 million yield-based PPP fund launched in 2017.

“The thesis is to travel with the agendas of net zero and ESG, with which infrastructure is well aligned,” Cavill adds.

Alba will continue the strategy the team followed while at 3i.

“We will continue to invest in mainstream renewables, green mobility, social infrastructure,” Grandguillaume says. “We will also invest in energy transition more generally and other typical infrastructure sectors like utilities, digital and water in particular. So the mandate is very broad but specialised in projects – greenfield, brownfield and project developers.”

The geographical focus on Continental Europe will also remain unchanged.

All three founding partners, who are also the owners of Alba, joined 3i in November 2013 from Barclays Infrastructure Funds Management, which 3i acquired at that time.

For its part, 3i told Infrastructure Investor through a spokesperson that the reason it decided to sell the business “is to simplify 3i’s infrastructure business and to facilitate its focus on core-plus infrastructure”.

According to 3i’s 2024 annual report, as of 31 March its infrastructure AUM stood at £6.7 billion. The firm invests in the sector through its listed entity 3iN, managed accounts and co-investment strategies. In December, it held a final close for its North American Infrastructure Fund on $739 million – a vehicle it launched at the end of 2021 targeting $1.1billion.