Allianz launches UK infra debt fund(2)

The vehicle, focused on core infrastructure, has a target of £500m.

Allianz Global Investors (AllianzGI), the investment arm of Germany’s Allianz, has launched a UK infrastructure debt fund.

The company aims to collect up to £500 million (€625 million; $856 million) for long-term, investment grade, core UK infrastructure assets. These will include roads, schools, hospitals, water and energy projects.

A number of institutional investors, including Japanese insurer Nippon Life, have already committed to the vehicle, AllianzGI said in a statement. The firm declined to name the fund’s other early backers.

“This new fund will allow the broadest possible church of institutional investors, including small to medium sized pension funds, access to the long-term, stable cash flows projects like this provide,” said Deborah Zurkow, chief investment officer of AllianzGI, in the statement.

The move marks a significant step in Allianz’ strategy, which established a dedicated infrastructure debt investment team 18 months ago. The asset manager has so far invested in the asset class largely through managed accounts, which it will continue to run alongside the fund.

The launch comes more than a year after the plans were first mooted by Allianz, which confirmed its ambition to set up a UK infrastructure debt fund in the second quarter of 2013.

At the time the firm was considering a fund target of £1 billion, a spokesperson for the firm told Infrastructure Investor. The revised size reflects the large investments made by AllianzGI’s infrastructure debt team since inception, the spokesperson said, anticipating that institutional investor interest would continue to grow as the fund builds up.

AllianzGI has invested €2 billion into eight infrastructure debt transactions over the last 12 months. Spanning seven European countries, these include the M8 project in Scotland, the A11 in Belgium and the L2 bypass in Marseilles.

The firm says it has a further pipeline of investments at the tender stage or close to completion.