Schroders has launched its first infrastructure equity fund and is looking to raise €700 million by early 2021, a source has told Infrastructure Investor.
Schroders Mid Cap Infra Fund will invest in mid-sized core assets within the eurozone, targeting a gross IRR of between 10 and 12 percent and a cash yield of 6-7 percent, the source said.
“It is a fund focused on income-generating assets, which are very resilient across economic cycles and are the most essential in terms of services provided within the infrastructure sector,” the source added.
The firm recently made its first investment through the fund, acquiring a 44 percent stake in Germany’s A8 motorway from InfraVia Capital Partners and Egis Investment Partners.
InfraVia invested in the PPP project in June 2013 through the InfraVia European Fund II, acquiring 25 percent of Autobahnplus A8 Holding, the concessionaire’s holding company. Egis Investment Partners, the investment arm of French engineering group Egis, was one of the original members of the Autobahnplus consortium, with a 19 percent stake.
The A8 motorway PPP included expanding the 37km (23-mile) stretch between Augsburg and Munich from four lanes to six. The expansion was completed in 2010. Aside from the construction phase of the project, the PPP also includes operating and maintaining an additional 15km around Munich, for a total concession length of 52km and a concession period of 30 years, which expires in 2040.
Although Schroders has invested in infrastructure equity before – it has a total of €750 million of assets under management in equity – it has done so through separate accounts or dedicated funds.
It has also raised £1.5 billion and invested £1.3 billion through its infrastructure debt platform, which it established in 2015, according to its website.
Schroders declined to comment for this story.