ECM Asset Management is aiming to raise €750m ($940m) from life insurers and other long-term investors into its infrastructure debt fund.
The $8bn asset manager, a division of Wells Fargo, has structured the fund as a closed-ended limited partnership, deploying debt capital via two parallel vehicles, one denominated in euros and investing in continental European assets and the other in sterling that will invest in the UK. This is so that investors on either side of the Channel will not have to hedge any currency risk.
The fund will buy and hold assets in sectors including renewable energy, social infrastructure, transport, power, oil & gas, telecoms and utilities. It will invest in senior limited-recourse debt and utility debt for the construction and operation of infrastructure projects, and will seek mainly floating-rate instruments with the flexibility to invest in fixed-rate debt up to 20%.
No return target was disclosed, but project finance loans tend to return more than corporate debt of similar risk, according to ECM.
Nicola Beretta Covacivich, head of infrastructure finance at ECM, said: ""With government funding reduced globally and banks' appetite for long-term lending structurally diminished by Basel III new capital and liquidity rules, funding is evolving as these traditional sources decrease. European infrastructure investments are expected to be approximately €2.5trn through to 2020. This is a great time therefore to take advantage of the sizeable supply and demand gap present in this space."
ECM will source its investments through a partnership with a major European financial institution, which the firm declined to name.
Life insurers account for about a quarter of ECM's assets under management, with banks at around 36% and pension funds 23%.