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Gravis £65m PFI debt fund fully invested

The fund’s last investment comprised £23.5m of subordinated loans to five UK healthcare and accommodation projects. 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 now fully invested, London-based Gravis Capital Partners, the fund’s manager, announced today.

The fund’s last investment comprised an aggregate £23.5 million (€27.1 million; $38.6 million) of subordinated debt to a portfolio of three healthcare and two accommodation UK PFI projects, principally owned by the UME Group, Gravis said. The loans will have an average life of 26 years and an expected annual return of 9.59 percent.  Subordinated debt ranks below senior debt and above equity. 
 
Gravis said it is already discussing further investments in several healthcare and education PFI projects, a number of senior PFI debt portfolios, and photovoltaic solar projects. Rollo Wright, a partner at Gravis, had previously told Infrastructure Investor that the firm is “planning to raise more funds toward the third quarter of this year,” although he declined to discuss what amount Gravis would seek to raise.

Wright credited 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.