UBS AM raises EUR570 million for first infrastructure debt fund
UBS Asset Management’s infrastructure and private equity business has held the final close of its inaugural infrastructure debt fund, Archmore Infrastructure Debt Platform (Archmore IDP), which has raised EUR570 million (USD640 million).
The capital has been raised from 17 institutional investors comprising a mix of insurance companies, pension funds and family offices spread across eight European countries and Japan.
This strong level of interest reflects the ongoing trend in the current low-yield and interest rate environment of investors seeking alternative investments, such as infrastructure debt, which offer low risk but higher yielding options relative to traditional fixed income investments.
Archmore IDP focuses on private infrastructure debt opportunities in Western Europe, primarily through direct lending. The fund aims to take advantage of the capital supply/demand imbalance in the mid-size European infrastructure investment market where borrowers are looking for alternatives to traditional bank financing. This is an asset class that is also increasingly appealing to investors due to the favourable solvency capital treatment it receives from the regulators which helps facilitate investors’ ability to make allocations to a new sector.
Ulrich Koerner (pictured), president of UBS Asset Management, says: "Among investors, we see a strong and growing interest in alternatives. Infrastructure debt is an attractive alternative asset class that offers stable, long term cash flows. The substantial final close of our inaugural infrastructure debt fund is another important step in the expansion of our alternatives offering, enabling us to provide the solutions clients need in this challenging environment."
The fund is managed by an investment team of experienced professionals led by Tommaso Albanese as the fund’s chief investment officer, based in London, and forms part of the firm's global infrastructure platform which comprises around 50 people and has EUR3.0 billion (USD3.4 billion) of capital commitments for direct investments into infrastructure, through debt and equity, and a further EUR2.8 billion (USD3.1 billion) through indirect investments.
Albanese says: "While investor demand for infrastructure debt is growing, investment opportunities require in-depth credit analysis and structuring flexibility to achieve a balanced risk profile combined with attractive returns. We maintain a highly selective approach to our investment decisions but have been able to deploy the fund’s capital swiftly. Furthermore, we have a healthy pipeline of attractive opportunities across Europe which gives us every confidence that we can invest the remaining capital in an equally effective manner."
Since the fund’s first closing in September 2014, UBS has deployed EUR220 million, or around 40 per cent, of the capital raised into four investments, including HH Ferries, a transportation operation in Scandinavia; Exeltium, an energy business in France; Senior Assist, a social infrastructure business in Belgium; and Spex, a solar energy park in Spain.