CVC Capital Partners has acquired a majority stake in DIF Capital Partners and is committed to a full takeover of the Netherlands-based infrastructure GP as more shares are realised over the coming years. The deal price was around €1 billion, according to a source close to the deal.
A spokesman for CVC argued that building an infrastructure outfit organically would have been disadvantageous: “The trend has been that LPs have put more allocation to experienced managers,” adding that the inclusion of DIF in CVC’s offering “gives LPs choice and allows them to invest across our strategies.”
DIF Capital Partners, founded in 2005 as an independent pure-play infrastructure platform, has €16 billion of AUM, a global remit and two funds in the market: the seventh flagship – DIF Infrastructure VII – targeting €4 billion and with a first close in August 2022 at €2.2 billion, and the third Core-plus Infrastructure Fund targeting €1.5 billion, which had raised €950 million a year ago. Both were launched in early 2022, and a source close to the funds says that both of them are close to their targeted amounts and may exceed those.
DIF may benefit from CVC’s global platform, scale and investor relationships to further grow its business. However, the pair are still looking for the best ways to synergise.
“We still have good momentum with the investors,” says Allard Ruijs, DIF’s chief investment officer, confirming that DIF was progressing on its strategies. “We are looking for ways to work together [with CVC] and leverage our joint expertise.”
CVC has €161 billion of assets under management through six strategies across private equity, credit and secondaries, ranking at 15th in affiliate title Private Equity International’s PEI 300 ranking. The company has 25 offices around the world and is considering a listing.
Previous forays into infrastructure include a 2009 dedicated fund which had raised €200 million of its €2 billion target before the fundraising was closed down in 2013. In the years since, it has made some infrastructure investments from its opportunistic private equity portfolio, joining Global Infrastructure Partners as a shareholder in Spain’s Gas Natural Fenosa – now known as Naturgy – in February 2018, following on from a 2017 investment in Spanish oil pipeline and storage operator Exolum. In November 2021, it took a 10 percent share in Greece’s public power corporation. This was followed by the March 2022 appointment Jiri Zrust from his position as head of energy transition at Macquarie Group as the head of infrastructure in its Strategic Opportunities platform.
CVC has form when it comes to growing by acquisition: in 2021, it took over Glendower Capital to get access to a secondary platform, and DIF is presented as the future infrastructure business line of CVC. The acquisition of DIF will provide an infra leg for the manager and complement CVC’s private equity, secondary and credit strategies.
DIF is in the mid-market to stay
DIF has positioned itself as mid-market and the flagship funds invest in lower-risk and mid-sized energy transition-related companies and projects as well as PPPs and concessions. The core-plus funds typically access opportunities across digital, energy transition and sustainable transportation verticals.
“We are one of the market leaders in the infrastructure mid-market and we follow investment opportunities. When we raise the next fund, then we shape that strategy for where we see the opportunities at that point in time. So, there will not be a shift in terms of strategy because of this event, and our funds may grow as they have before, but we will not suddenly aim for higher figures than originally in our business plan,” said Ruijs.
Ruijs, along with the rest of the managing team, will remain in their posts, and active partners are retaining their shares for the foreseeable future. Also, DIF will continue to operate under the DIF brand. What will change is that DIF’s two founders, Maarten Koopman and Menno Witteveen, are selling their stakes in the firm, having already stepped back from an active role.
The announcement comes after a summer of deal closures for DIF. Investments have included Canadian geothermal energy systems, a UK-based 540MW co-located solar and battery portfolio, and a fibre roll-out in Finland. Only six weeks ago, a £200 million investment into UK-based developer and operator of battery energy storage systems, Field, was announced.
“The energy transition is where we see a big market opportunity along with digital. We expect AI to boost the data centre market,” says Ruijs.
DIF has offices in Amsterdam, Frankfurt, Helsinki, London, Luxembourg, Madrid, New York, Paris, Santiago, Sydney and Toronto, and according to Ruijs, there are no plans for any of these offices to merge with CVC’s.
The transaction is subject to regulatory consent and is expected to close in Q4 2023 or Q1 2024. JPMorgan was one of the advisers to CVC and among DIF’s advisers were Morgan Stanley, Loyens & Loeff and De Brauw.