Infrastructure
Closely connected for
enhanced outcomes
We invest in and actively manage businesses and services connected to our everyday lives.
At Federated Hermes, our Infrastructure team specialises in providing institutional investors with cost-effective access to equity investments across a broad spectrum of infrastructure opportunities.
Our platform includes a flagship core and core plus strategy invested in critical UK and European infrastructure companies. We secure governance rights consistent with the investment that usually includes representation on boards and board committees. This approach allows us to build close relationships with business leaders and co-shareholders and make targeted interventions to guide company activity.
As the reshaping of global energy systems accelerates, so too does the demand for capital to support this significant structural growth driver. Our team of investment and specialised project development experts provide investors with access to proprietary investment opportunities in complex renewable energy projects and next generation energy infrastructure higher up the return spectrum.
At a glance
Source: Federated Hermes as at 31 December 2024.
The value of investments and income from them may go down as well as up, and you may not get back the original amount invested.
Ports & Logistics: Associated British Ports
The pillars of our offering
Our infrastructure platform combines proactive investment management with project development expertise. The combination maximises the opportunity to earn attractive risk adjusted returns across the full investment life cycle: development, construction, operations, and realisation.
Why Federated Hermes Infrastructure?
How we invest
We primarily pursue two investment strategies:
Core Strategy/Core+
Our flagship fund has a single diversified core/core+ strategy. The fund seeks to invest in stable infrastructure businesses characterised by lower volatility and predictably high-single digit returns (a large proportion of which is derived from cash dividends). These investments are largely uncorrelated to GDP and can provide a measure of inflation protection.
Among the various means by which we manage risk across our investments, influencing and engaging with company leaderships remains one of the most effective. By taking long-term, governance-level positions in companies, we are able to engage with management teams and exert influence in coalition with fellow shareholders. From this long-term investor vantage point, we can evaluate risk holistically, seeking to deliver tangible change.
Next generation Infrastructure
The acquisition of a majority interest in Rivington Energy (Management) Limited adds specialised project development expertise to existing institutional investment and asset management capabilities.
The combination will provide investors with access to a pipeline of proprietary investment opportunities principally related to the evolving energy transition landscape with an increasing focus on partnering with industrial and commercial businesses to undertake projects that increase energy efficiency (and reduce cost), reduce carbon emissions and provide opportunities for regeneration and adaptation of existing infrastructure.
Our portfolio
We are focused on creating diversified infrastructure portfolios for clients in high quality businesses and assets, seeking to deliver attractive risk adjusted returns.
Investments are considered across multiple sectors and geographies including the UK, Europe, North America and selected other OECD jurisdictions.
Ports
Associated British Ports
Associated British Ports (‘ABP’) is the UK’s leading port group, owning and operating 21 ports in England, Scotland and Wales. ABP plays an essential role at the heart of the UK economy, supporting around 120,000 jobs and contributing £7.5 bn to the economy every year. Together with its customers, ABP handles around £150 bn of UK trade annually, with £40 bn of UK exports passing through the Port of Southampton, making it the UK’s number one export port.
ABP is a high quality infrastructure business that operates under a landlord port model that delivers long term stable cash flows. The business is well positioned to capitalise on the UK’s green energy transition and has committed to net zero emissions of its own operations by 2040. ABP is already one of the largest corporate producers of solar energy and has a pipeline of projects to facilitate floating offshore wind and sustainable fuels amongst other opportunities.
Managed stake: 6.1%
Acquired: 2015
Gas distribution network
Cadent Gas
Cadent is the largest distributor of gas in the UK, owning and operating four of the eight regulated gas distribution networks (‘GDN’s’), supplying gas to domestic, commercial and industrial premises across the UK. The assets are critical to the UK’s energy infrastructure, with 131,000km of pipelines across the UK, providing gas to c.11 million consumers.
Cadent benefits from stable, inflation-linked recurring cash flows as part of its regulated model. Cadent can play an instrumental role in the UK’s energy transition and is at the forefront of hydrogen developments, participating in hydrogen and hydrogen blending initiatives.
Managed stake: 13.6%
Acquired: 2017, 2019
Highspeed rail services
Eurostar
Eurostar is one of Europe’s leading international high speed rail operators with a fleet of 51 trainsets, transporting over 18million passengers. It is the sole operator of the cross-Channel route and in 2022 merged with pan-European train operator Thalys to form the Eurostar Group. With its unique fleet, it now operates services connecting 4 European countries; UK, France, Belgium, the Netherlands and Germany.
Eurostar’s ambition is to be the lowest carbon form of international travel and is well positioned to meet the growing demand for sustainable travel.
Managed stake: 6.4%
Acquired: 2015
Wind energy generation
Fallago Rig
Fallago Rig is an onshore wind farm with 48 turbines and 144 megawatts of generation capacity. Located 35km south-east of Edinburgh, Scotland in a remote part of the Scottish Borders, Fallago Rig’s capacity to produce clean energy is estimated at 445,800 megawatt hours of electricity per annum, which could displace approximately 190,000tn of CO2 each year. Fallago Rig has the capacity to provide about 90,000 typical UK households with power each year.
Fallago Rig has predictable inflation linked cashflows, generated in a stable, transparent and supportive regulatory environment through its participation in the Renewables Obligation Certificate (‘ROC’) regime.
Managed stake: 80%
Acquired: 2013
Social infrastructure
Innisfree Funds
We are invested in two social infrastructure funds managed by Innisfree. These are PPP and PFI funds managing social infrastructure concessions, such as transport, schools and hospitals, primarily across the UK.
Toll-roads
Iridium Hermes Roads
Iridium Hermes Roads operates six shadow toll roads (the ‘Roads’) located in five different regions of Spain. With a combined network of 233 km, this represents one of the largest privately owned toll road portfolios in Spain.
The Roads operate under shadow toll regimes meaning that pricing terms are pre-agreed. Revenues are paid by local governments and as such, revenues are protected from road user price elasticity of demand.
Managed stake: 74%
Acquired: 2020
Ferry services
Scandlines
Scandlines operates two short-distance, high frequency ferry routes between Germany and Denmark (Rodby-Puttgarden and Gedser-Rostock) providing critical transport links between Scandinavia and Germany and the rest of Continental Europe. Fully integrated into the road infrastructure, the company’s seven ferries (six of which are hybrid) provide efficient and reliable transportation services to the leisure and freight markets, transporting approximately six million passengers and 750 thousand freight units per annum. It also owns and manages one of the world’s largest floating border shop in its Puttgarden harbour.
Scandlines has reduced emissions per trip by around a third since 2008, and has set ambitious net zero direct emissions targets by 2040, which it aims to meet through further electrification of its fleet. A new, fully electric ferry, is expected to become operational in 2024.
Managed stake: 14.9%
Acquired: 2018
Water utility
Southern Water
Southern Water operates the seventh largest water supply and sewerage company in England and Wales. It supplies drinking water to almost one million households and treats and recycles wastewater from nearly two million households, operating in Southern England.
Managed stake: 3.8%
Acquired: 2007
Water utility
Thames Water
Thames Water is the UK’s largest provider of water and sewerage services in the UK serving over 14 million customers in the London and Greater London area. It operates across the entire water and sewerage spectrum comprising raw water storage, water treatment and supply, distribution sewerage, sewerage treatment and sludge disposal plants and 349 sewage treatment works within the business.
Managed stake: 8.7%
Acquired: 2013
Wind energy generation
Ventus
Ventus is an 813 megawatt (MW) portfolio of five onshore wind farms located in Northern Sweden.
Ventus’ capacity to produce clean energy is estimated at 2,592,000 megawatt hours of electricity per annum which could displace approximately 18,000 tn of CO2 each year in Sweden. Ventus has the capacity to provide about 300,000 typical Swedish households with power each year.
Managed stake: 20%
Acquired: 2019, 2020
Energy from waste
Viridor
Viridor is a UK leading energy from waste (‘EfW’) and plastics recycling company owning and operating 11 EfW sites and 2 plastic recycling facilities across the UK. Revenues are underpinned by long-term gate fee contracts typically with local authorities and commercial and industrial counterparties.
Viridor is well-positioned to benefit from the dynamic transition to a sustainable circular economy where its business model is supported by government policy.
Managed stake: 9.5%
Acquired: 2020
The above information does not constitute a solicitation or offer to any person to buy or sell any related securities or financial instruments. It should not be assumed that the above securities were or will be profitable. A list of all purchases and sales is available upon request. References to future expectations cannot be guaranteed. The above information is at 30 September 2023.
Who we are
Latest Infrastructure insights
TCFD Report 2024
We believe that the risks and opportunities posed by climate change are crucial factors that can impact investment performance. Read our TCFD Report to find out how we integrate climate analysis throughout the investment process to manage these impacts for our investors.
Closely connected for enhanced outcomes
Heritage and track record
We have been connecting clients to Private Markets opportunities since our first real estate investment in 1983.
Client-centric investing
We’re passionate about connecting clients to innovative investment solutions that seek to deliver financial, as well as social and environmental returns.
Access to high-quality investment opportunities
Our 40+ year track record is driven by a mindset of building and nurturing long lasting relationships that deliver outcomes.
Enhanced outcomes and portfolio diversification
We believe our experience, deep networks and partnership approach enable us to get clients closer to the opportunities in Private Markets – because we are.
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