Investing in UK infrastructure for over 20 years.

Manchester Airports Group (MAG) encompasses the UK’s third and fourth largest passenger airports and its largest dedicated cargo airport. Our funds first invested into it in 2013, alongside Manchester City Council and nine Greater Manchester district councils and have actively encouraged its growth.  

In 2021 we fully supported the £1.5 billion programme to refurbish and expand Manchester airport. The first phase of the programme doubled the footprint of Terminal 2, while the second phase, which began in 2025, will expand passenger capacity by 50% to 42 million passengers a year. 

The group took best practices from this transformation to gain regulatory approval to extend the terminal of Stansted airport. This will expand passenger capacity to up to 43 million a year, while improving operational efficiency and customer experience. We anticipate the extension will result in 5,000 new jobs and double Stansted airport’s contribution to the local economy.  

MAG is also a leading player sustainable aviation infrastructure. All its energy needs are met through renewables, and it has set a target to achieve net zero Scope 1 and Scope 2 emissions by 2038, 12 years ahead of the UK’s national target. 

We made our first investment into Italy in 2022, when our net zero climate fund partnered with family office San Quirico to gain a large stake in ERG.  

The company renewable energy business operates wind and solar installations across Europe, including in the UK, and we became a strategic partner to help it grow in line with its wider strategy. Our partnership drawing upon SQ’s expertise in renewable energy and our investing experience in renewable energy and infrastructure. 

The partnership with SQ to invest in ERG is an example of us allying with like-minded investors to support renewable energy across Europe and beyond. Like us, SQ is investing into sustainable energy to play a larger role in the energy industry over the long term.  

ERG has excellent investment prospects, as Kyle Mangini, our global head of infrastructure, noted at the time of the investment agreement. Industry group Wind Europe estimates that Europe must double its wind energy capacity by 2030 “to meet its climate and energy security goals”. Plus, many of its existing wind turbines are aging and in need of repowering with state of the art turbines.  

We believe ERG can help modernise wind turbines across Europe and the UK, multiplying their energy capacity and production as it does so. 

For infrastructure debt investors, navigating national and corporate priorities around energy security and decarbonisation presents both challenges and opportunities. This is particularly prevalent when it comes to managing transition risk. We believe sustainability-linked loans (SLLs) offer a way to align capital deployment with measurable environmental and social outcomes. 

Overview 

• Company 

  A UK-based shipping operator that provides service operations vessels (SOVs) and emergency response and rescue vessels performing critical access and safety-related services to offshore energy infrastructure 

• Deal origination  

  IFM Investors originated and structured this opportunity via an existing relationship with the borrower and its financial advisor, leveraging prior engagement to facilitate a follow-on investment. 

• Loan overview 

  In 2024, an account managed by IFM Investors completed a follow-on investment via a sustainability-linked loan (SLL), supporting the company’s strategic pivot from oil and gas services to offshore wind operations. 

Why this investment? 

We saw this investment as potentially offering attractive relative value in a sector undergoing extensive transformation:   

• Exposure to essential infrastructure 

  We believe the company plays a vital role in ensuring the operational continuity and safety of offshore energy infrastructure, via its fleet of service operations vessels (SOVs), and emergency response and rescue vessels.  

• Diversification of revenue  

  Prior to our investment, over 90% of the company’s revenue had been generated by services related to offshore oil and gas operations¹. But the company has sought to pivot in a changing world, where European energy security and decarbonization are high on the agenda. This diversification of revenue streams should help increase the company’s stability. 

• Positive contribution to the clean energy transition 

  The UK accounts for 43% of Europe’s offshore wind capacity², and the UK government has set ambitious targets for cutting greenhouse gas emissions³. By diversifying away from oil and gas, we believe the company’s contribution to the clean energy transition – both in the UK and Europe – represents a significant opportunity to harness thematic tailwinds as an investor.  

Our active approach: What’s been the focus since 2024? 

SLLs like this one seek to help companies meet sustainability goals and provide an opportunity for ongoing engagement between debt investors and borrowers. They typically give greater visibility on emissions and broader sustainability metrics within portfolios. Specifically, robust discussions between borrower and lender over the right targets, margin ratchets and measurements can help quell concerns over a lack of ambition, or even greenwashing.  
 
In many ways, this transaction reflects our active approach to sustainable investment and risk management. Crucially, interest payments over the loan’s tenor can be stepped up or down, depending on whether the company:   

• Increases its revenue from offshore wind 

• Adds vessels dedicated to offshore wind servicing 

• Maintains injury rates below industry benchmarks 

The outcome 

For IFM, this loan helps us engage with the company and support its multi-year sustainability journey, which in turn helps us manage risks and seek to generate long-term risk adjusted returns for our investors.

[1] Sourced from due diligence materials shared privately by the borrower.
[2] ‘UK Offshore Wind Report 2023’, The Crown Estate, April 2024,  p.4.
[3] By 2035, the UK government plans to reduce all greenhouse gas emissions by at least 81% compared to 1990 levels. ‘United Kingdom of Great Britain and Northern Ireland’s 2035 Nationally Determined Contribution’, Department for Energy Security & New Zero,  30 January 2025.