SL Capital increases exposure to Arcus infrastructure fund

The private equity arm of Standard Life Group has increased its stake in the Arcus vehicle through its debut infrastructure secondaries fund.

SL Capital Partners, the private equity arm of Standard Life Group, has made another purchase from its debut infrastructure secondaries fund, according to a UK regulatory filing.

The firm bought a stake in Arcus European Infrastructure Fund 1, a €2.17 billion vehicle that closed in November 2007 after six months of fundraising.

SL Capital bought the interest through its SL Capital Infrastructure Secondary I fund from Keva, Finland’s local government pensions institution. Earlier this year, the firm bought 36 percent of a stake in the same Arcus fund from German asset manager KGAL, according to a UK regulatory filing in March.

It wasn’t clear from the filing how much SL Capital paid for this second stake or when the deal was completed.

The transaction comes amid heightened interest in infrastructure secondaries, with a report by intermediary Setter Capital this week showing volume in the sector grew more than any other secondaries sector in the first half of this year, compared with a year earlier. Secondaries deals in the traditionally long-held asset class are becoming more acceptable, according to experts.

“Following the private equity trend, market participants are more comfortable with the secondaries market, welcoming the additional liquidity and flexibility it brings,” said Charles Ford, a lawyer at Hogan Lovells who advises on the acquisitions and disposals of infrastructure investments.

Arcus European Infrastructure Fund 1 is backed by more than 40 institutional investors and has a total enterprise value of €12 billion, according to the website of Arcus Infrastructure Partners, which manages the fund. The vehicle holds six assets including port, train, toll and communications towers operators such as Euroports, one of the largest dry bulk port operators in continental Europe, and Angel Trains Group, one of the UK’s biggest train leasing companies.

Edinburgh-based SL Capital closed SL Capital Infrastructure Secondary I earlier this year on an undisclosed sum, Secondaries Investor reported. The fund made its second purchase in July, buying a stake in a Macquarie-managed European infrastructure fund.

The firm also launched SL Capital Infrastructure I this year with an initial target of £500 million ($782.7 million; €701.2 million). The fund has an allocation of up to 25 percent for opportunistic secondaries purchases in infrastructure funds, Secondaries Investor‘s sister publications Infrastructure Investor reported in June.

SL Capital and Arcus declined to comment on the deal. Keva was not immediately available to comment.