3i builds its infrastructure presence

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3i Group is to buy the European infrastructure fund management business of Barclays as part of a drive to boost its fee income from public-private partnerships and renewable energy projects.

The private equity firm, aiming to become one of Europe’s biggest investors in the infrastructure sector, said yesterday the deal would help it to raise new funds and source new investment opportunities for its 3i Infrastructure business. Financial terms of the transaction were not disclosed.

With yields on staple investments like UK gilts and German bunds hovering around record lows, pension funds are bankrolling more government-backed projects to build new roads, bridges and public buildings in the hope these will deliver higher, inflation-protected returns. 3i has been undergoing a restructuring following shareholder frustration at weak results from its buyout business, moving away from just private equity to balance this better with its infrastructure and debt-management businesses.

“This is, in our view, a transformational deal for the existing infrastructure business line,” JP Morgan analyst Christopher Brown said.