Sun Life to Expand in Infrastructure With InfraRed Deal

(Bloomberg) -- Sun Life Financial Inc. agreed to pay $390 million to acquire 80% of infrastructure and real estate investment manager InfraRed Capital Partners, a deal that broadens its alternative investment offerings.

InfraRed, which had $12 billion in assets as of Sept. 30, will become part of Sun Life’s alternatives asset manager SLC Management, the companies said Wednesday in a statement. London-based InfraRed, which also has offices in New York, Hong Kong, Sydney, Seoul and Mexico City, oversees more than 200 infrastructure and real estate projects in 30 countries, according to its website.

Alternative assets such as infrastructure are a key growth area for the money management industry, since they can generate higher fees in return for high-touch management at a time when public stock and bond funds as well as the brokerage trading business are becoming increasingly commoditized. The deal for InfraRed, a former unit of HSBC Holdings Plc, is SLC Management’s first foray into infrastructure equity.

“InfraRed is a top investor in global infrastructure for their institutional clients,” SLC Management President Steve Peacher said in an interview. “They’ve been in business for a long time and came out of a high-quality organization when they spun out of HSBC, and they’ve got a great reputation in the marketplace because they’ve been able to generate excellent returns.”

Sun Life is also committing to co-invest $400 million to support the launch of new InfraRed initiatives. The deal gives InfraRed’s owners the option to sell their remaining interest within about four years from the closing, and Toronto-based Sun Life an option to buy the rest within about five years.

InfraRed’s investing expertise in renewable energy was also an appeal, according to Peacher, who said he’s had an eye on infrastructure opportunities for “quite some time” to broaden the firm’s global institutional asset manager.

“We really felt the capabilities in infrastructure equity would be a natural addition to our lineup between fixed-income, private credit and real estate,” Peacher said. “We thought it provided just another way that we could bring return, yield and duration to our clients.”

Sun Life, with C$1.06 trillion ($807 billion) in assets under management as of Sept. 30, provides insurance and wealth and asset management for individual and corporate clients. The company’s SLC Management operations, including Sun Life’s general account, oversees C$227 billion in assets.

©2019 Bloomberg L.P.

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