ING Real Estate, one of the world’s largest real estate investment managers, is seeking €1 billion ($1.5 billion) of capital for the ING European Infrastructure fund.
The Netherlands’ based firm, which manages more than €100 billion of property, plans to deliver a 10 percent internal rate of return from acquiring and managing European assets, according to a statement.
The move comes as a number of fund sponsors make the case that in turbulent times for commercial real estate, steady long term income from inflation-hedged assets provides a haven for capital. Recent vehicles targeting infrastructure include a $7.5 billion fund managed by Goldman Sachs, a $2 billion fund managed by Lehman Brothers and 3i Group’s India-focused infrastructure vehicle which raised $1.2 billion.
ING first revealed its plan to launch an infrastructure fund in September 2006 and has since been working on assembling the initial assets before raising equity. A spokesperson said: “Since the launch in September 2006 the fund has been acquiring the seed assets. It has taken some time to secure the right assets at the right price. We have also recruited further specialists to run the fund including Richard Games, Simon Ellis and Andrea Finegan.”
The fund will invest in a wide spectrum of infrastructure assets, leveraging off the firm’s client relationships at the bank, supported by the fund management knowledge of ING Real Estate, it said in the statement. It is currently being seeded with assets both from within the pool of infrastructure investments already held by ING and from new opportunities being pursued by the fund. Recent acquisitions include a 24.9 percent stake in Q7, an offshore wind farm project on the Dutch continental shelf, and a 29 percent share in the Appia consortium, the new owner of motorway service station group, Welcome Break.
Games, who is heading the fund, said: “Our infrastructure fund offer is in direct response to market demand. The stability of returns, strong cash flow content and natural inflation hedge, give significant benefits to an investment portfolio. Given the volatility of the current market, infrastructure assets with their low correlation to the economic cycle and other asset classes become very appealing to investors.”