AMP Capital has launched a new infrastructure debt strategy focused on Asia, complementing its existing global Infrastructure Debt Fund series.
The strategy will target mezzanine debt opportunities in the wider Asia-Pacific region, a broader mandate than the global fund series, which can only invest in developed markets such as Australia, Japan, New Zealand, Singapore, South Korea and Taiwan.
The new emphasis will provide investors with opportunities to invest in assets in those markets, as well as developing countries like India and those in South-East Asia, Simon La Greca, AMP Capital head of infrastructure debt Asia told Infrastructure Investor.
The strategy will initially focus exclusively on separately managed accounts, but the firm may consider raising a dedicated Asia debt fund at some point in the future, La Greca said.
“There’s a large infrastructure spend required across Asia, so from the deal side of things this region is where the biggest growth is globally at the moment. We’ll take our established global sponsor relationships, along with the mezzanine debt financial structures we use around the globe, and apply it to a new market,” he said.
“We’ll leverage off the wall of capital that is already coming to Asia in terms of equity funds.”
La Greca could not disclose any targets for the amount of capital AMP Capital hopes to deploy but said it aims to make it a “scalable strategy consistent with the level of dealflow we see,” which would necessitate the ability to write large ticket sizes.
The strategy will focus on the same four sectors that AMP Capital’s global debt fund series does, namely: energy generation, particularly renewables; digital infrastructure; transport; and utilities.
The firm has already completed one deal in Australia under the strategy that La Greca could not provide further detail on at this point, with a “strong pipeline” that was likely to see more deals announced in the coming months.
AMP Capital has made other debt investments in the Asia-Pacific region before, including a A$210 million ($148 million; €127 million) mezzanine debt investment with Stonepeak Infrastructure Partners to support the acquisition of Taiwanese offshore wind farm developer Swancor Renewable Energy. Funding for that deal was provided through AMP Capital Infrastructure Debt Fund IV, which closed on its $4 billion hard-cap in October 2019.
La Greca will lead the deployment of the strategy from AMP Capital’s headquarters in Sydney, supported by principal Justin Chan-Sew in the firm’s Singapore office, which opened in 2019. Associate director Justin McRae and fund controller Rob Fogarty, both internal hires, will also support the strategy from Sydney.
On the attractiveness of debt strategies during the coronavirus-induced economic downturn, La Greca said: “Investors are looking for stable risk-adjusted returns and assets that are not cyclical or exposed to economic conditions. Our portfolio has performed very well during covid-19, because they’re essential assets that are required regardless of economic conditions – we’ll continue to look for those kinds of assets in future.”