Schroders has launched a UK-focused infrastructure debt fund with a view to raising £500 million ($662.8 million; €555.2 million) of capital.
The fund will provide junior loans in the transport, energy, environmental, social infrastructure and telecoms sectors, hoping for a return of Libor plus 4-5 percent. The 10-year vehicle will seek to raise funds from pensions and insurance companies and is aiming for investments in what Schroders sees as higher-yielding opportunities in the market.
The move is Schroders’s first infrastructure debt attempt in the UK market and the firm described the country as “boasting a healthy investment opportunity set”. It has previously raised three infrastructure debt funds and two segregated accounts dedicated to investment opportunities in Europe, garnering about €1.4 billion of capital.
However, Charles Dupont, head of infrastructure finance at Schroders, sees even greater potential in the UK.
“The UK is the most significant infrastructure market in Europe and boasts a strong pipeline of infrastructure debt opportunities,” he said. “Crucially, institutional investors in need of yield will benefit from diversifying into this asset class, whose secure income streams have often proved to be resilient to economic and financial cycles.”
Schroders launched its infrastructure finance division in September 2015, recruiting Dupont from a similar role at AXA IM.