Hadrian’s Wall, the pioneering infrastructure debt fund, is winding down and is returning all of the money it raised to its limited partners (LPs).
“Due to the shortage of investment opportunities, the current competitive environment, falling interest rates and tightening credit spreads, I did not feel the fund would be able to deliver its targeted returns to investors. It was a tough decision, but as a result, we have recommended giving the money we raised back to our LPs,” Marc Bajer, chief executive of Hadrian’s Wall Capital (HWC), told Infrastructure Investor.
HWC, the advisory firm to the subordinated infrastructure debt fund, will continue though.
Bajer was one of the first people to seize on the gap left in the infrastructure debt space after banks retrenched in the wake of the global financial crisis. Specifically, he was one of a handful of people that started thinking about how to bring institutional investors back into infrastructure financing.
A former monoline man, he bet the house on devising a fund which would use money raised from investors to credit-enhance infrastructure bonds into A-rated territory. The fund would do this through fully-funded subordinated debt positions within senior-ranking infrastructure bonds. In addition, Hadrian’s Wall would also offer comprehensive managing creditor services.
Insurer Aviva liked Bajer’s vision enough to team up with Hadrian’s Wall and in 2010, the partners hit the road with the Aviva Investors Hadrian Capital Fund 1, targeting more than €1 billion for a mixed euro / sterling fund. But it would take two years for Hadrian’s Wall Capital to reach a first close for the fund, with £150 million raised from Aviva, the European Investment Bank and the Development Bank of Japan.
From last summer onwards, Hadrian’s Wall set its sights on closing a first deal, an indispensable milestone for any new vehicle seeking further commitments. But that first deal was never to be. Bajer, however, remains bullish on Hadrian’s Wall’s original vision: “One thing is clear – only the bond market is big enough to meet Europe’s infrastructure financing requirement”.
Regarding his future plans, Bajer stated that he plans to continue “working to assist market counterparties and fixed income investors in order to move forward the development of a fixed income market for infrastructure financing.”