Aviva’s Infrastructure Income Fund has agreed a £75 million ($96.4 million; €84.1 million) investment in a rural broadband provider in the UK as part of a £365 million deal pipeline being considered.
The insurance firm’s asset management business has plugged the funds into TrueSpeed, an ultrafast full-fibre broadband provider operating in rural communities in the south-west of England. The company, established in 2015, will use Aviva’s investment to fund its expansion strategy which aims to connect up to 75,000 homes and businesses in the region.
The TrueSpeed commitment is forecast to provide the Infrastructure Income Fund an IRR of 10.3 percent, according to a recent report for the Hammersmith and Fulham pension fund. It is part of a series of investments in the vehicle’s pipeline, totalling a possible £365 million deployment, the largest part of which includes a £115 million outlay on two greenfield biomass opportunities estimated to provide an IRR of 14 percent.
Other potential investments include spending £110 million on construction-ready utility-scale onshore wind sites with a 7.5 percent return and £55 million on a collection of medium-scale wind assets with a projected 7.2 percent return.
The tie-up with TrueSpeed is the first allocation to broadband by the open-ended fund, which had £566 million assets under management as of the end of last year. Some 46 percent of the UK-focused fund’s portfolio is based in small-scale solar, with 25 percent and 20 percent allocated to biomass and utility-scale wind respectively.
The Infrastructure Income Fund has delivered annual returns of 11.4 percent since its inception in 2012, making distributions to its investors of £112.5 million. The fund is reportedly looking to carve out more niche opportunities in which it can build scale.