Middle Eastern investment firm Abu Dhabi Investment Company and Swiss asset management giant UBS have raised $250 million for the first close of the ADIC-UBS Infrastructure Fund I.
The fund, jointly managed by the two firms, is targeting commitments of $600 million for its final close. It will invest in transport networks, power, water, education and health facilities.
MENA: $400bn of infrastructure spending planned
“Most of the fund's investments will be in 'greenfield' assets, but because we are talking primarily about government concessions or long-term contracts with solid partners, cash flows are predictable and the risks less than in pure private sector deals,” Vincent Gilles, chief investment officer of ADIC-UBS Infrastructure Investment, said in a statement.
“The Middle East is often seen as a source of capital but we want to highlight to investors that there are also great investment opportunities here,” Mark Thompson, chief executive of ADIC-UBS Infrastructure Investment, said.
He added that infrastructure in the region is still being developed and “there’s a massive need for equity”. Governments in the MENA region are looking to spend large sums on infrastructure development and research commissioned by the ADIC-UBS Infrastructure Fund indicates that more than $400 billion of spending is planned for the next decade, the statement noted.
ADIC-UBS Infrastructure Investment is a 50:50 joint venture formed by the two firms in February 2008. It is planning to launch new funds over a three year period, including a second infrastructure fund which will raise up to $1 billion.