InfraRed Capital Partners will be restructured to focus solely on infrastructure after an internal reorganization by its parent company, the Canadian insurer Sun Life Financial, PERE can reveal.
The London-headquartered global real asset manager has approximately $12 billion in equity under management. Approximately $10 billion of this is invested in infrastructure, with the remaining $2 billion split across real estate platforms in Europe and Asia.
Following Sun Life’s acquisition of an 80 percent stake in the business last year, the company has sought a corporate solution for the smaller real estate part. The Toronto-based company, which owns InfraRed via SLC Management, its alternatives asset management platform, also owns a majority stake in New York-based BentallGreenOak which, with $55 billion of assets under management, is its primary real estate investment management business. Sun Life acquired a 60 percent stake in BGO in 2019.
BGO is expected to absorb the Asian part of InfraRed into its own operations in the region. Operated by a team of approximately 20 executives, the InfraRed Asian business has historically focused on Hong Kong and mainland China. BGO, on the other hand, has been primarily focused on North Asian markets, including Japan and Korea.
In Europe, it is understood there is too much overlap in business activities between BGO and InfraRed. As such, Sun Life has engaged boutique corporate firm Fenchurch Advisory Partners to conduct a strategic review, which is expected to result in a sale to another investment manager. Shortlisted parties are understood to be engaged in due diligence, with a transaction expected to be signed in the next few months.
BentallGreenOak’s and InfraRed’s next European owner will inherit operations with some target-hitting performances of late. PERE understands both InfraRed’s latest European real estate value-add fund, InfraRed Active Real Estate Fund IV, and its Asia equivalent, InfraRed NF China Real Estate Fund III, are on track with their return targets of about 13-15 percent net IRRs.
InfraRed confirmed to PERE that both transactions are ongoing. “Our detailed assessments concluded that our European real estate investment management business would be best served independently,” said Stuart Jackson, head of real estate at InfraRed Capital Partners. “We can confirm that we are in discussions with prospective partners, but have no further comment at this time.” Jackson, who is currently running both the firm’s Asia and European real estate businesses, will continue to be part of InfraRed’s European platform post-transition. In Asia, the transferring staff will report to Marcus Merner, partner of BentallGreenOak in Japan.
“The transition into BGO’s larger Asian real estate platform ensures continuity and stability to the benefit of all stakeholders, with BGO seeking to grow the business with added products and initiatives over time,” added Jackson. “The transaction is expected to complete in May, subject to regulatory consents in Guernsey and Canada.”
PERE understands the merger of the Asian businesses was signed in December, with pending regulatory approval to be confirmed before next month, and that InfraRed’s investors are currently being contacted about the changes.
Neither InfraRed nor BGO would comment on the details of the transition. Nonetheless, an indication of the outcome for the real estate business was suggested when Sun Life acquired the majority stake in InfraRed last year. Steve Peacher, president at SLC Management, said at the time that the firm would like to build on InfraRed’s $10 billion infrastructure track record and that he was “very confident about the long-term growth in infrastructure investing.” In the announcement of that deal, there was no commentary on the real estate business.
InfraRed, which was formerly owned by bank HSBC, has raised nine real estate funds and completed over $9 billion of real estate deals since its inception.