London-based Gravis Capital Partners (GCP) has launched the UK’s first open-ended infrastructure fund.
The vehicle will look to provide a client base largely made up of retail investors, which have traditionally struggled to access the asset class due to the closed-ended nature of existing platforms, with an annual dividend of 5 percent, GCP senior partner Stephen Ellis told Infrastructure Investor.
Describing the vehicle’s strategy, he said VT UK Infrastructure Income Fund aims to offer exactly what it says on the tin: stable, predictable and non-correlated income.
Having identified 40 stocks meeting its investment criteria, the fund will start off with a £78.8 million (Currency conversion) portfolio comprising between 20 and 25 holdings. The latter will include shares of both listed infrastructure companies and funds, with names such as Heathrow Airport, Thames Water, HICL Infrastructure Company and John Laing Environmental Fund mentioned in a memo describing the offering.
GCP will act as investment adviser to the fund, with Stephen West, former global head of credit trading at Swiss lender UBS, responsible for picking stocks. These will span social, economic and energy infrastructure as well as securities issued by contractors, mostly focused on equity, with a maximum 15 percent going into debt investments.
GCP will charge respective management fees of 65 and 75 basis points to institutional and retail investors.
William MacLeod, head of investor relations at the firm, said companies eligible for selection represented a market capitalisation of about £3.5 billion. He argued that the fast growth of a market that only a few years ago was a bounded universe had created space for open-ended funds to exist.
The vehicle will add to GCP’s suite of closed-ended funds, which together add up to £1 billion in assets under management. Investors will be able to subscribe to the new fund the week starting 18 January, with trading to commence on the 25th.