Austrian insurer UNIQA Insurance Group is in talks to award a €1 billion mandate to Macquarie Group to invest in infrastructure debt, according to Infrastructure Investor sister publication Private Debt Investor.
“UNIQA plans to invest up to €1 billion in infrastructure within the next years,” Hannes Bogner, chief investment officer of UNIQA Insurance Group AG, told PDI in an email statement. “Our focus will be on social infrastructure, supply systems and transport. Further details have not been finally decided.”
UNIQA declined to make any further comment on what manager it had awarded the mandate to or whether it could choose more than one to oversee the €1 billion allocation. Macquarie also declined to comment.
Arrangements for the commitment to infrastructure debt should be in place by the end of the year though, sources close to the situation said.
Final approval is partly on hold until there is more clarity around how the national regulator, the Austrian Financial Market Authority (FMA), will view institutional investors extending loans, PDI understands.
UNIQA is said to be looking to invest in senior fixed-rate debt investments. Historically in Europe, banks dominate the infrastructure loan market.
BaFin, the German regulator, introduced legislation earlier this year allowing institutional investors to extend loans. By the end of the year, it’s thought that the Austrian regulator will be more certain about how to treat direct loan investments by institutional investors also.
An investment from UNIQA could prove a test case for the regulator. In response to a request for comment, FMA said it views private debt investments in line with its European peers.
Insurance companies are increasingly looking at private infrastructure debt to help support asset liability management, due to the long-term nature of the investments and aided by Solvency II requirements. Separately managed accounts, whereby institutional investors and managers allocate alongside each other in any given deal, have been growing in popularity, in an effort to keep down costs. Given the competitive nature of the infrastructure debt market and declining spreads, funds need to be big, one market source said.
Macquarie closed its UK inflation-linked infrastructure debtfund, Macquarie Infrastructure Debt Investment Solution (MIDIS), on £739 million in July. The Australia-headquartered manager has raised around £2.5 billion for its global debt platform and deployed about £800 million. Macquarie launched the platform in November 2012 and invests in fixed- and floating-rate infrastructure debt.
Macquarie’s first SMA was a $500 million mandate that insurance and reinsurance group Swiss Re awarded it, announced around the same time as it launched its MIDIS platform. The strategy of the mandate was to invest in senior secured debt of infrastructure businesses and assets located primarily in northern Europe.