GCP proposes wind-up of Gulf fund

Listed UK fund manager Gravis Capital Partners has suggested that shareholders agree to shelve a planned $250m debt fund for Middle East projects.

Following a strategic review on 12 June, London-listed fund manager Gravis Capital Partners (GCP) has said it will propose the winding up of its GCP Sovereign Infrastructure Debt fund.

The fund was launched in November last year alongside Dubai-based bank Exotix and had a target of $250 million for investment in utility-scale projects in the Gulf region. It had planned to deploy the capital within four to six months, but it is understood that only around half the target amount had been raised and that sourcing suitable investments was proving difficult.

In a submission to the London Stock Exchange, GCP said it had consulted with shareholders representing 92 percent of its voting rights and – taking into account their feedback and other advice – the board would “put forward a proposal for a winding up of the company [GCP Sovereign Infrastructure Debt Limited] and cancellation of the trading of its shares on the specialist fund market of the London Stock Exchange”.

It added that a circular setting out details of the proposal would be posted to shareholders early this month.

The fund had aimed to replicate the strategy followed by GCP’s existing UK funds, which aim at allowing infrastructure developers to free up capital by providing refinancing solutions post-construction phase.

Upon completion of the investment phase, the fund had a target return of 6-7 percentage points over Libor (London Interbank Offered Rate) and an annualised dividend yield of 5 percent for its first financial period to 31 December 2014.

At the time of the fund’s launch, GCP partner Stephen Ellis told Infrastructure Investor that the fund would focus on Saudi Arabia, UAE, Qatar, Bahrain, Kuwait and Oman “which are immensely rich and where there is strong explicit support for…major power and water cooling projects.”

It is understood that the fund has not made any investments since launch.

GCP has been successful at raising funds for its UK strategy. For example, its listed GCP Infrastructure Investments vehicle collected £144 million (€180 million; $247 million) from a fundraising in December 2012 which had targeted £80 million – more than doubling the size of the fund in the process.

Infrastructure debt continues to be a highly touted investment category. Yesterday, Infrastructure Investor confirmed that infrastructure equity giant Global Infrastructure Partners has launched a $2.5 billion debt fund. Today, Allianz Global Investors unveiled the launch of a £500 million UK debt fund.