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Gravis £65m PFI debt fund close to being fully invested

The fund is to provide more than £22m in loans this month, after which its capital will be fully invested. London-based Gravis expects to tap the market again later this year for a fresh round of fundraising.

GCP Infrastructure Fund, a debt vehicle that invests in UK private finance initiative (PFI) projects, is expected to become fully invested later this month, the fund’s manager Gravis Capital Partners announced in a statement. 

The London-based firm is expected to provide later this month £22 million (€25 million; $36 million) of subordinated debt loans, with an average life of 28 years, to several healthcare and accommodation PFI projects before its Jersey-based open-ended vehicle becomes fully invested. 

Subordinated debt ranks below senior debt and above equity and is typically more expensive than senior debt because of ranking.

When the origination of these loans close, the fund will have provided about £65 million in subordinated debt to several PFI projects.  Nine months ago, Gravis raised £40 million through a feeder fund listed on the London Stock Exchange, known as GCP Infrastructure Investments. 

Having exhausted that capital, Gravis plans to tap the market for a fresh round of fundraising later this year.

“We are planning to raise more funds toward the third quarter of this year,” Rollo Wright, a partner at Gravis Capital Partners told Infrastructure Investor, although he said it was still early days to discuss exactly what amount Gravis would seek to raise.

Wright credits the fund’s relatively rapid full investment to the strength of its investment proposition:

“We target fully operational, availability-based PFI projects, primarily in the healthcare and education sectors. Our subordinated debt loans allow PFI developers to free up equity to bid for new projects. This provides them with an alternative to exiting these deals, which they sometimes cannot do on account of tax reasons or change of control clauses,” he explains.

GCP Infrastructure Fund is targeting returns of 8 percent.