Sun Life (SLF-T) is committing more than $1 billion Cdn to acquire a majority interest in, and create new investments for, London-based InfraRed Capital Partners. The infrastructure and real estate investment manager advises on more than $16 billion of assets under management across the U.K. and globally.

Sun Life will spend $515 million for an 80 per cent interest in the firm and has committed a further $530 million to co-invest and launch what it calls “new InfraRed investment solutions.”

InfraRed will form part of SLC Management, Sun Life’s alternatives asset management business. The acquisition is part of Sun Life’s strategy to broaden its asset management base.

“We’re excited to acquire a majority position in InfraRed, which further broadens SLC Management’s alternative solutions to now include infrastructure equity,” said Steve Peacher, the president of SLC Management, in a release Wednesday morning.

“InfraRed is a leader in global infrastructure investing in both greenfield and brownfield projects, including renewable energy. These investments have historically provided the returns and horizon that institutional clients are seeking.”

Sun Life can acquire remaining 20 per cent

The transaction also includes an option for InfraRed’s owners to sell their remaining interest to Sun Life in four years. Conversely, Sun Life will have the option to acquire the remaining interest one year later.

InfraRed has more than 175 partners and staff.

“We established SLC Management in 2014 to develop a line-up of fixed income and alternative strategies to help institutional investors meet their obligations, similar to how we invest our own general account at Sun Life,” Peacher said in the release.

“InfraRed’s proven investment capabilities in infrastructure are a natural extension of SLC Management’s solution set. There is also a strong cultural fit between the two firms.”

The transaction is expected to close during the first half of 2020, subject to regulatory approvals and closing conditions.

“I am delighted to announce this transaction with Sun Life and SLC Management which enables us to drive the growth of our business in the Americas, in particular the renewable energy market,” said Werner von Guionneau, InfraRed’s CEO, in the release.

“SLC Management and InfraRed have complementary capabilities, a similar culture of prudence and long-termism, and proven track records of delivery.”

InfraRed Capital’s international operations

InfraRed Capital Partners operates worldwide from offices in London, Hong Kong, New York, Sydney, Seoul and Mexico City. It manages about $16 billion of equity capital in private and listed funds, primarily for institutional investors, across the globe.

InfraRed has been a signatory of the Principles of Responsible Investment since 2011 and was awarded a triple-A+ score in the 2019 PRI assessment.

Over the past 30 years InfraRed has, within Charterhouse Bank, then at HSBC and currently independently, established itself as a successful developer and custodian of core infrastructure, renewable energy and real-estate assets.

“InfraRed has grown to become a leading international infrastructure investor.

“To build on this success, our ambition is to continually evolve so that we maximize the potential of our capabilities and address the exciting market opportunities we see in infrastructure overall and particularly around the low carbon energy transition,” von Guionneau said in the release.

“This transaction is the perfect way to do this and the InfraRed management team and I look forward to working closely with SLC Management and Sun Life to realize our ambitions.”

Skadden, Arps, Slate, Meagher & Flom LLP served as Sun Life’s legal counsel and Fenchurch Advisory Partners served as financial advisers. Ardea Partners International LLP were financial advisors to InfraRed and Weil, Gotshal & Manges LLP served as their legal counsel.

About Sun Life

Sun Life provides insurance, wealth and asset management solutions to individual and corporate clients.

The country operates in many markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia and Bermuda.

As of Sept. 30, Sun Life had total assets under management of $1,063 billion.

About SLC Management

SLC Management is the institutional asset management business of Sun Life Financial Inc. under which Prime Advisors, Inc., Ryan Labs Asset Management Inc., and Sun Life Capital Management (U.S.) LLC in the United States, and Sun Life Capital Management (Canada) Inc. in Canada operate.

As of Sept. 30, SLC Management’s collective operations, including Sun Life’s general account, had assets under management of $227 billion.