Allianz eyes up to £500m with second UK debt fund

The German-based firm says ‘strong client demand’ could allow it to raise nearly twice as much as it collected for its debut vehicle.

Allianz Global Investors is planning to a launch its sophomore UK infrastructure debt fund later this year in a bid to capitalise on solid institutional appetite for core asset exposure, PDI sister publication Infrastructure Investor has reported.

The investment manager did not disclose a target for the vehicle but a spokeswoman for AllianzGI told Infrastructure Investor that the team was expecting to raise between £250 million ($311 million; €290 million) and £500 million, “in line with strong client demand”.

That would be likely to bring it past the total it garnered for its first UK infrastructure debt fund, which reached its final close on £265 million in September 2015. The vehicle launched in the summer of 2014 with a £500 million target.

Known LPs in the fund include Nippon Life Insurance Company and the London Borough of Haringey Pension Fund.

Like its predecessor, AllianzGI’s second fund will invest in long-term, investment-grade, core UK infrastructure assets, including primary brownfield and greenfield deals in the transport, energy and social infrastructure sectors, the firm said.

“Having helped ‘prove the concept’ of infrastructure debt as an asset class suitable for institutional investors over the last few years, the demand from our clients for a second fund reflects the maturity of the UK infrastructure debt market. We are seeing strong, ongoing interest from our clients, domestic and international in funding important UK infrastructure projects,” commented Adrian Jones, UK infrastructure debt portfolio manager at AllianzGI.

The firm said has already committed more than £750 million on behalf of clients into UK infrastructure projects, a large chunk of which came from separately managed accounts, Infrastructure Investor understands.

Projects backed by the firm include the Aberdeen Western Peripheral Route and M8 road projects in Scotland, university accommodation in Nottingham and Exeter, and the A1/A4/A5 road project in Northern Ireland.