EUROPE - Barclays is to tap UK pension funds and insurers for a target £500m (€571m) infrastructure senior debt fund expected to launch in the third quarter.
Barclays Corporate will seed the fund with £200m in assets from its existing pipeline "to give a return from day one".
The pipeline includes social and economic infrastructure assets, renewables, electricity and waste-to-energy assets.
The company will retain a 20% share in each asset.
David Cooper, Barclays Corporate head of infrastructure, said: "All the assets in the fund will be broadly investment grade, and they'll all be complementary.
"There isn't a huge difference in risk profile between social infrastructure under a PFI or PPP contract and renewables."
He told IP Real Estate the fund would attract primarily UK investors with an appetite for sterling-denominated assets.
"Most will have exposure, but via equity rather than debt, or indirect exposure via monoline-wrapped bonds," he said. "The fund could also attract investors with existing direct exposure to infrastructure looking for a first exposure to infrastructure debt."
Insurers expected to invest in the fund are those without in-house infrastructure teams and are "sized below Aviva or Legal & General", according to a source.
Cooper said: "For most investors, this will be the primary exposure to new deals that are usually difficult to access for institutional investors.
"There's usually a long procurement process. You need a team to organise and execute the deal, then another team to manage the asset through the development phase. Institutional investors are unlikely to have a team in house to generate the pipeline and manage it."
He added: "If you're a bank, it's a difficult asset class to access. If you're an institutional investor, it even more difficult."
Cooper said the fund was "a very different proposition" from recent infrastructure equity funds.
Barclays last year struggled to raise capital for the latest in a series of infrastructure equity vehicles following earlier funds' failure to generate anticipated returns.
A Deloitte report published in April suggested bank infrastructure funds were suffering significantly as pension funds shunned them over perceived conflicts of interest.
In contrast of mezzanine debt, which pension funds have largely ignored, senior debt vehicles potentially offer lower returns for lower risk.