Union Investment raises €442m with Mercer for maiden infra fund

Vehicle’s managers to make direct, primary and secondary investments in western Europe and North America, targeting returns of 6%-8%.

 German asset manager Union Investment has secured €442 million for a new infrastructure fund in conjunction with Mercer Private Markets.

A spokesman for Union Investment told Infrastructure Investor that the pair had closed the UniInstitutional Sachwerte Infrastruktur-Invest 1 vehicle following commitments from around 100 German investors, most of which are banks belonging to cooperative financial group Volksbanken und Raiffeisenbanken. The fund’s original target was €300 million.

Around 50 percent of its acquisitions will be primary investments in infrastructure funds. The remaining capital has been reserved for direct deals and secondary fund commitments.

The fund is targeting investments in western Europe and North America across the communications, energy, utilities, transport and social infrastructure sectors with a targeted IRR of 6-8 percent. It has a 14-year term with a two-year optional extension.

Union Investment is responsible for the structuring, regulatory and tax, product management, reporting and sales aspects of the fund. The German firm’s spokesman said that Mercer would be responsible for due diligence and “providing access to good infrastructure funds”.

The vehicle is Union Investment’s first wider infrastructure fund, though the asset manager did raise €320 million for a renewables fund that was launched in 2012 and which invested in wind and solar assets across Europe.

The firm had €323 billon in assets under management as of December 2018, though real estate, infrastructure and other alternatives accounted for only 12 percent of this.

The spokesman said Union Investment had launched the fund to address the needs of its institutional clients and to offer access to an attractive alternative asset class that is “interesting in the long term”.