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Barings Named "Global Institutional Investor of the Year"

Mar 09, 2018

Barings is on track this year to book US$2.5bn of global infrastructure debt across the globe. As part of the MassMutual Financial Group, its focus has been on the North American market but this year has seen expansion into Latin America, Europe and Australia/New Zealand.

The deals transacted certainly vary. They include three PFI award-winning deals this year – AES Southland in the US, Walney in the UK and Endeavour Energy in Australia, plus a wind farm in Uruguay, Campo Palomas, the LF Wade Airport in Bermuda, the IIRSA toll road in Peru and the East Surrey Pipes deal in the UK. It funded another UK trains deal for Rock Rail and was involved in the rapid-fire Leeds Hospital PFI refinancing, a deal transacted in a month on instructions from the UK Treasury.

It took part in the Latin American Power deal in Chile – a transaction with the first investment-grade rating achieved for a wind project with ongoing merchant exposure, and that was the largest ever investment grade renewables project financing in South America and the first renewables capital markets financing in Chile

This year, the investment portfolio was split into the US with US$1bn, UK and Europe US$1bn, Latin America US$300m, and Australia/New Zealand US$100m. More than 40 deals were transacted in 14 countries. Hiring is ongoing in Europe and Australia. The team expects to transact US$3bn next year and take bigger tickets on deals as it signs up more co-investors – both in the US and Asia.

The investor’s infrastructure book now stands at US$10bn. The operation is headed by Emeka Onukwugha, who leads both the US$20bn corporate placement team and the infrastructure team. In all, there are 16 in the unit.
Barings, formerly Babson Capital, is able to offer a full range of debt – fixed and floating and in various currencies. It mainly focuses on investment grade, accounting for 90% of its investments, but has investment buckets available for sub-investment grade. Sixty percent of its deals are in dollars.

Unlike other institutional investors, it provides stapled financing to bidders. This year, it has worked on the mega National Grid UK deal, where it offered a stapled financing to all the bidders, and on the Walney UK offshore wind deal, which started out life as a stapled deal. In the US, it backed Infrared/DOF/Northleaf’s successful bid for North West Parkway.

This range of products means it can act as a quasi-bank style funder as well as fulfil the traditional role as an institutional investor. Barings has US$300bn in investments – with US$213bn in fixed income and US$53.7bn in alternatives – so it has the financial clout to provide a range of options.

The result, thus far, is a portfolio with US$4.7bn in core infrastructure – transport PPP and water and waste, US$4bn in power and energy and US$900m in petrochemicals and stadiums. The ambition, along with most of its peers, is to grow next year. But the team has a solid base on which to grow.

Reproduced from Project Finance International Yearbook 2018 © Thomson Reuters

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Cheryl Krauss
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