Seed commitments from nine institutional investors have led UBS Asset Management’s Real Estate and Private Markets business to raise €448.4 million for Archmore Infrastructure Debt Platform II, a vehicle that has a target of €700 million and a hard-cap of €1 billion.
Like its predecessor, IDP II will focus on private infrastructure debt opportunities in Western Europe, primarily through direct lending, aiming to take advantage of the capital supply/demand imbalance in the mid-market, the Swiss asset manager said in a statement.
From a sectoral perspective, the new vehicle will invest in transportation, utilities, telecoms, energy and social infrastructure “and will seek to build a diverse portfolio of Solvency II efficient assets across investment grade European countries,” according to marketing materials.
IDP II will target 10 to 16 investments, but to ensure diversification, UBS has set the following concentration limits: no more than 20 percent of the fund will be invested in any one investment, no more than 30 percent in any one country, and no more than 10 percent in assets falling outside the defined risk profile. The fund has an annual gross return target of 4 percent.
UBS expects to reach final close within the next 18 months.
“Our ability to effectively deploy the proceeds of our debut infrastructure debt fund so swiftly and the fact that we have attracted such substantial seed commitments, largely from repeat investors, is testament to the ability of our team to access the excellent investment opportunities in the European market,” said Tommaso Albanese, head of infrastructure at REPM and the fund’s chief investment officer, in the statement.
According to the firm, more than 75 percent of investors committing to IDP II are also invested in its predecessor, a €570 million vehicle UBS closed in September 2016.
IDP I’s portfolio to date has 11 investments across several sub-sectors and countries (see charts). UBS did not provide further details other than to mention a €75 million refinancing of a brownfield toll road in Poland, the most recent investment made through its debut fund. The firm had not responded to requests for comment by the time of publication.
Established in 2007, REPM’s infrastructure platform has €3.37 billion under management including both debt and equity strategies.