Hastings Funds Management, an alternatives manager owned by Australia’s Westpac Banking Corporation, is launching an infrastructure debt fund to capitalise on the general decline of available credit.
Sources close to the process said the fund would target around €1 billion in commitments. Hastings declined to comment on the potential size of the fund, instead saying it will be “significant”, reflecting the size of the market and lack of competitors.
Hastings Infrastructure Debt Fund III (HIDFIII) will predominantly lend junior debt to infrastructure projects and businesses in sectors such as utilities, transport, telecommunications and social infrastructure.
“This decline [in available credit] has caused a sizeable funding gap which has constrained infrastructure investment activity,” the firm said in a statement, adding that junior debt provides a “logical” financing solution to take advantage of the €50 billion in investment opportunities forecast over the next five years.
Parent company WestPac intends to commit the cornerstone investment to the fund, which is targeting “low double-digit” returns, said a source close to the process. A first close is scheduled for the second quarter of 2010.
This will be Hastings’ third infrastructure-focused debt fund and the firm has a total of around A$6 billion (€3.7 billion; $5.5 billion) in funds under management across 15 vehicles. In addition to infrastructure, the firm manages private equity and high yield strategies.
The firm launched its first infrastructure equity fund in 1994 and its first infrastructure-focused debt fund in 1999.