The Pipeline: Thames under tighter supervision, Campbell Lutyens names new CEO, CDPQ invests in Brazilian transmission

First look

Ofwat shows some teeth

It seems in the latest game of chicken with Thames Water, UK water regulator Ofwat is refusing to blink, placing the country’s largest water utility into a special “turnaround oversight regime” that means heightened supervision and sending the company’s management back to the drawing board to come up with a different business plan.

To make the utility “investable” after its shareholders, which include OMERS Infrastructure, Universities Superannuation Scheme and China Investment Corporation, deemed it the opposite in March, refusing to inject more equity into the company, Thames was asking to raise customer bills by 59 percent between 2025 and 2030. Instead, Ofwat, in its draft decision issued last week, approved an average 21 percent increase for the country’s 16 water utilities.

And things might get even more difficult for Thames and the sector in general, should proposals put forth by Environment Secretary Steve Reed be included in legislation that could pass as early this week.

Those proposals include Ofwat having the power to block bonuses of executives of polluting water companies, imposing criminal charges, as well as severe fines, according to the FT. Should they come to pass, they certainly won’t be music to the ears of Thames’ management, which has asked for more lenient fines. Nor for its chief executive, Chris Weston, who received a £195,000 ($252,765; €231,958) bonus after three months on the job, a bonus he defended as being based “purely on performance”.

‘A worthy economic endeavour’

While the energy transition in the US is estimated to cost $10 trillion over the next 30 years, the transformation of utilities and the electrification of transport, which combined represent around 65 percent of emissions, could provide net financial benefits of $2.3 trillion annually.

That’s the conclusion analysts at Siebert Williams Shank, an independent non-banking financial services firm came to in a report published last week.

“Our analysis tells us that the clean energy transition is a worthy economic endeavour,” they wrote. “No climate or government ideology is required.”

The analysts also argue that the transformation should be self-funding “in the aggregate”. Massive government incentive programmes, carbon limits or taxes are not necessary, thanks to the 200 percent increase in electricity demand that is expected over the next few decades driven by EV adoption, industry electrification, AI, digital growth and other economic growth trends.

However, an acceleration of the transition is needed and can be achieved primarily through procedural and policy reform, “that is essentially free”, the analysts claimed.

Of course, that doesn’t take into consideration any potential political cost.

CIP floats away

Copenhagen Infrastructure Partners has walked away from two offshore wind projects it was set to build in its native Denmark, the company announced.

CIP had formed a JV with Danish energy player Andel in September to bid on the Hesselo and Kriegers Flak II projects in Denmark, with a combined capacity of at least 1.8GW.

However, in another challenge for Europe’s offshore wind market, having “closely read the tender material”, CIP partner Thomas Dalsgaard said in a statement that they have “not been able to make ends meet”.

“Sometimes you have to recognise that reality can get in the way of good thoughts and plans. That is why we now choose to set each other free in the Danish tender,” Jesper Hjulmand, managing director of Andel, said in the statement.

Hjulmand added Andel would continue with the projects, stating “the climate crisis does not wait for interest rates to fall and market conditions to become more stable”.

Andel and CIP will continue existing project collaborations together, as well as eyeing other projects in the future.

Water under the bridge, then.

Obligo seeks to make an impact with €75m fund

Obligo Investment Management has reached a final close on its Nordic Climate Impact Fund, in less than a year since its launch.

Although the Article 9 fund is Swedish krona-denominated, the total raised was quoted in euros – €75 million – in both a statement and on the firm’s website. Obligo did not disclose a final target for the fund and did not respond to a request for comment. However, according to Infrastructure Investor data, the fund’s target was SKr2 billion ($191 million; €76 million).

ONCIF “will primarily target bilateral investments in the Nordic region, focusing on clean mobility, renewable energy, digital infrastructure, and carbon capture usage and storage,” the Oslo-based alternatives investment manager said in a statement. It will target a net IRR of between 11 and 13 percent and annual dividends of between 2 and 4 percent.

Obligo said that it has already deployed capital from the fund into six investments with “several more in the pipeline,” but did not provide details. It also did not disclose average ticket sizes other than to say that it would invest in projects and companies with enterprise values of between €25 million and €250 million.

The asset manager is part of the Obligo Group, which includes Obligo Real Estate and Obligo Business Services. Its AUM totals €1.2 billion, according to its website.

Grapevine

“The forecasting isn’t going to help much with the damage”

MIT professor emeritus Kerry Emanuel explaining to Politico that no matter how accurate hurricane forecasting can be, it is no substitute for long-term adaptation

Who’s hiring promoting

Bajnai to become CEO of Campbell Lutyens

Gordon Bajnai, who joined Campbell Lutyens in 2011 as advisory director and has held various roles since then, most recently as head of the firm’s global infrastructure and energy transition practice, has been appointed CEO.

He will assume his new role on 1 September, but will retain responsibility for the infrastructure practice, Campbell Lutyens said in a statement. He is succeeding Andrew Sealey, who has been with the firm since 1990 and has served as its CEO since 2003.

Bajnai’s lengthy career has spanned both the private and public sectors. His previous roles include group COO of Paris-based Meridiam and CEO of asset manager and private investor Wallis Group.

Between 2009 and 2010 he served as Hungary’s prime minster and also held positions on the investment committee of the European Fund for Strategic Investments.

Bajnai said he is looking forward to leading Campbell Lutyens through its next growth phase.

“Our market-leading offering combined with the depth of our experience and specialised team provides us with a strong foundation to expand further.”

With Campbell Lutyens topping Infrastructure Investor’s debut placement agent ranking last year, we will be watching this expansion closely.

Deals

CDPQ goes (Brazil) nuts for LatAm transmission

Canadian pension giant CDPQ is charging ahead with plans to bolster its exposure to the Latin American market with the acquisition of a 124km transmission asset in Brazil.

The deal, valued at up to C$210 million ($154 million; €142 million), sees CDPQ, via its wholly-owned Verene Energia power transmission business, acquire the SPE 7 network from utility Equatorial Energia.

This marks CDPQ’s third such foray into Latin America in two years and chimes with its strategy of investing in renewable energy-enabling infrastructure and the energy transition.

Eduardo Farhat, managing director, infrastructure, Latin America, told The Pipeline that the long term revenue generation profile and inflation-linked returns of the asset “makes a lot of sense”, while a stable and strong regulatory base makes Brazil “a good place to be”.

“The pace of growth [of the portfolio] will be defined by the quality of the opportunity”, noted Farhat, adding that there could be scope for greenfield investments via Brazil’s auctions for transmission lines. “There is more to come, so stay tuned.”

Brookfield takes a Leap

Brookfield Asset Management has made another investment through its Global Transition Fund I, a commitment of “over $200 million” to acquire a majority controlling stake in Indian renewables platform Leap Green Energy.

The $15 billion GTFI will make the investment through a combination of subscription of new shares and acquiring existing shares from current shareholders, with the deal providing an option for Brookfield to inject a further $350 million of incremental equity into the business to support future growth.

Leap Green Energy provides green energy to the commercial and industrial sector in India, with a particularly strong presence in Tamil Nadu. The firm has 775MW of wind and solar assets either operating or under construction.

Brookfield’s investment will be used to grow the platform to more than 3GW of capacity over the next four to five years, with Tamil Nadu remaining a key target market.