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US private equity group General Atlantic has agreed to buy London-based infrastructure fund manager Actis, a combination further underscoring a wave of consolidation gripping private markets.
The terms of the deal, which is expected to be announced early on Tuesday, could not immediately be learned, but they will involve General Atlantic buying control of Actis.
Doing so will add $12.5bn to General Atlantic’s $83bn assets under management. It will bring under its ownership a specialist in sustainable infrastructure investments, particularly in emerging markets, an area where chief executive Bill Ford predicts increased investment activity.
“The capital need for sustainable infrastructure and the energy transition is huge,” Ford said in an interview with the Financial Times from the World Economic Forum in Davos. “Trillions of dollars of new investment is going to be needed so we think Actis represents a tremendous opportunity.”
The Actis transaction comes just days after BlackRock agreed to buy Global Infrastructure Partners for $12.5bn to create the world’s second-largest infrastructure firm.
While General Atlantic is well known for backing fast-growing technology and consumer companies such as Alibaba, Ford said emerging markets’ growing demand for infrastructure such as energy transmission reminded him of investment opportunities created by the rise of smartphones and ecommerce a decade ago.
The infrastructure operation will join a growing stable of investment capabilities inside General Atlantic. Last year, it acquired a footprint in credit investments by purchasing Iron Park. It also seeded Clipway, a specialist that buys second-hand investor stakes in private equity funds, or secondaries, to build a presence in that fast-growing market.
Actis is General Atlantic’s largest acquisition yet, pushing the New York-based investment group to nearly $100bn in total assets.
Ford indicated the deal would probably fulfil General Atlantic’s appetite for sizeable acquisitions to diversify its operations. “We’re in the markets we want to be in,” he said.
General Atlantic’s expansion push comes as some prominent private equity groups consider public listings, while others sell to strategic partners with broader financial resources.
Last month, the FT reported General Atlantic had filed confidentially for a public listing in the US. General Atlantic declined to comment.
Other private equity groups including CVC have prepared plans to go public, creating expectations of a second wave of listings following the crisis-era floats of Blackstone, Apollo and KKR.
Actis chief executive Torbjorn Caesar said his group had considered other deals, such as selling a minority equity stake, but had decided that partnering with General Atlantic would give it access to a broader range of potential investors and insights into a wider array of industries.
Actis, created as a development finance arm of the UK government, was spun out in 2004 after its management team bought a 60 per cent stake for £373,000. They acquired the remaining 40 per cent for £8mn eight years later.
The UK group is known for a having a global investment reach, with dealmakers in 17 offices in cities ranging from Mexico City to Seoul. In recent years, it has made large investments in companies in the Middle East and sub Saharan Africa, where Ford expects population growth will fuel the demand for infrastructure and bolster the group’s growth.
Caesar will continue to lead Actis and its funds will continue to use the Actis brand.
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