Aviva hits €170m first close on new European debt fund

The fund is seeking up to €500m, €50m more than its predecessor, which closed in 2014 and is performing above target.

Aviva Investors has reached a €170 million first close on its new European Infrastructure Debt Fund, following commitments from five investors.

The initial investment came from a group of European insurance companies, including Aviva France, ahead of a €500 million target for the fund, set to close next year. The firm did not disclose the amount Aviva France committed nor the names of the four other investors in the vehicle.

The fund’s strategy is to invest in euro-denominated infrastructure bonds and loans in the electricity and heat, renewable energy, utilities, social infrastructure and transport sectors. It will be managed from both Aviva’s Paris and London offices.

The Aviva European Infrastructure Debt Fund has a gross target of 180-220 basis points over Euribor, the same as its predecessor, the firm told Infrastructure Investor. It added that investments could range from €15 million to €75 million, although its diversification strategy is likely to result in the average ticket size accounting for about 10 percent of the total fund size.

Investments will be focused across Europe, although Aviva declined to disclose specific investment destinations. Recently launched euro-denominated debt funds, such as those from SCOR and BNP Paribas, have ruled out investments in the UK, partly due to currency risk and the country’s impending departure from the European Union.

The vehicle is a successor to Aviva’s European Secondary Infrastructure Credit Securitisation Vehicle, which raised €450 million upon closing in 2014. The fund provided debt to Dutch telecoms group Reggefiber, an underground train line in Milan as well as European solar and utilities commitments. Aviva said the first fund is currently performing above target, with an expected spread above 250bps.