Infracapital launches £1bn greenfield fund

Infracapital, the infrastructure arm of UK-based M&G Investments, is looking to raise £1 billion (€1.3 billion; $1.4 billion) for a vehicle focused on greenfield assets.

The European Investment Bank (EIB), which is currently assessing whether to contribute to the effort, disclosed the existence of the fund via a note on its website. The size of the EIB’s potential commitment was not disclosed.

The move follows last year’s creation by Infracapital of a new greenfield arm headed by former 3i Infrastructure partner Andy Matthews. The freshly launched unit would target assets in the energy sector, it was said at the time, with a lesser emphasis on transport, telecommunications and social infrastructure.

Although no return target was disclosed for the new vehicle, industry insiders say greenfield strategies have been one way for infrastructure fund managers to try and maintain returns amid increasing competition for core brownfield assets.

Infracapital’s greenfield fund will be headed by Matthews, according to a source briefed on the matter, who added that ex-3i staffer Michele Armanini would also be involved in the effort.

The firm last October launched a UK-focused bioenergy platform alongside Helios UK BIG, Aurium Capital Markets and the Foresight Group. It committed £160 million to the venture, with Helios pledging £30 million.

The firm had previously invested up to £20 million in Gigaclear, a company bringing faster broadband connectivity to the UK’s rural areas, on behalf of parent group Prudential. That followed its maiden greenfield deal, a £100 million equity injection in the £1 billion Swansea Bay Tidal Lagoon project, also funded by Prudential.

Some of the firm’s existing greenfield assets may be used to seed the new fund, a source said. Infracapital declined to comment.