EUROPE - An infrastructure and real estate fund focusing on the Benelux region has been launched following demand from Belgian pension fund and insurance companies for low-risk, non-listed exposure to the sector.
Inframan, a joint venture between Dexia bank and private equity firm Gimv, will manage the fund, which has already raised €80m in capital commitments from a number Belgian investors, including Pensioendfonds voor de Bouwnijverheid, the pension fund for the Belgian construction sector.
DG Infra Yield follows an earlier fund launched in 2007, DG Infra+, which also invests in infrastructure and real estate projects in the Benelux region, but is higher up the risk scale.
Manu Vandenbulcke, managing director of DG Infra+, said the original fund invested in Greenfield projects and so was exposed to development and construction risk.
But pension funds in Belgium, he said, made it clear this was too high risk for their needs.
"[The new fund] is focusing on providing opportunities for pension funds and insurance companies in Belgium to gain access to the non-listed infrastructure market, with a focus on the Benelux," Vandenbulcke said.
"We focus on what I would call mature assets or operational assets, where there is no - or very limited - construction or development risk involved."
DG Infra Yield has a long life span of 30 years and is seeking to provide preferential periodic cash distributions to its investors, linked to a long-term yield.
It is restricted to mature and operational projects or asset-based companies.
Investments by the fund in projects with construction or development risks are limited to the junior-mezzanine or senior debt tranches of such projects.
DG Infra Yield has a focus on public-private partnerships, selective real estate and renewable energy projects, as well as on transportation, social, information and communication technology and storage infrastructure.
The first acquisition for the fund is a €10m investment in the mezzanine financing of an offshore wind park project off the Belgian coast called Belwind.
Once fully operational, the wind park will provide green energy to 350,000 families.
The construction of the first phase (55 turbines) started in September 2009 - Belwind expects to complete the project toward the end of the year.
Vandenbulcke said Belgian institutional investors were comfortable to focus on the
Benelux markets, given their lack of existing exposure and experience in non-listed infrastructure or real estate.
"The Belgian market is moving slowly toward infrastructure as a new investment class, so what the markets needs is a low-risk product that invests in operational assets not too far from the home market," he added.
Inframan said advanced negotiations were ongoing, with several other investors wishing to participate in the first closing scheduled for September 2010.