Lloyds plans fund for European infrastructure

The UK bank is in talks with investors to gauge their support for a new infrastructure fund that would target investments across Europe.

Lloyds Banking Group, a UK bank in which the government owns a 41 percent stake, is gearing up to launch a new infrastructure fund to focus on investments across Europe, according to a source close to the bank.

Lloyds is currently in talks with investors to gauge interest for its new vehicle, which would target social infrastructure and other sectors such as ports, power and airports. The talks are being conducted by Lloyd’s project finance department, led by Gershon Cohen. The project finance unit was created after Lloyds bought ailing UK bank HBOS, where Cohen was head of infrastructure.

A spokesman from the bank declined to comment on the new vehicle except to outline the bank’s position regarding infrastructure investments in general:

“Lloyds has established a strong track record in financing the design, build and operation of key infrastructure projects across the UK. We are committed to playing our part in supporting the ongoing development of such projects, through investment and lending, as the economy emerges from the recession,” he said.

Lloyds already has an infrastructure fund investing in projects that form part of the UK’s project finance initiative (PFI) – the government’s standardised procurement process tendering public works projects to the private sector.

That fund, which the Financial Times (FT) claims is backed by four large pension funds, emerged after HBOS sold its stakes in 47 PFI projects prior to merging with Lloyds. Some of the PFI projects in the fund include school regeneration in Edinburgh and Glasgow, the FT reports.