BlackRock’s move to launch a debt fund targeting infrastructure is part of a wider trend becoming visible in the European market. Indeed, there has been a sharp increase this year in the number of fund managers seeking to raise capital for infrastructure debt funds in Europe, according to Preqin.
BlackRock’s move to launch a debt fund targeting infrastructure is part of a wider trend becoming visible in the European market. Indeed, there has been a sharp increase this year in the number of fund managers seeking to raise capital for infrastructure debt funds in Europe, according to Preqin.
The London-based consultancy that tracks investment in alternative assets estimates that there are currently six asset managers in Europe in the process of capital raising for infrastructure debt funds, seeking to raise a combined total of $7.3 bn (EUR 5.6 bn). This includes Aviva Investors, Edifice Capital and Sequoia Investment Management Company. This is up from $900 mln raised in the year to date and marks a huge shift in sentiment from 2010 and 2011, when no such funds were raised, according to Preqin.
BlackRock's new infrastructure debt platform will be headed up by Philippe Benaroya and Chris Wrenn, as well as Gilles Lengaigne. The types of infrastructure targeted include transportation, some utilities, hospitals and universities, Wrenn told PropertyEU.
Cash-strapped European governments are wising up to the benefits of encouraging pension funds to invest in infrastructure projects that are costly to finance. The UK government is currently mulling the possibility of permitting local authority pension schemes to double the amount they can invest in infrastructure. ‘There is increased interest in infrastructure due to its stability and the fact that it offers stable, long-term returns,’ Wrenn said. ‘The UK government’s plans would support what we are doing,’ he added.
However, the lending market is quite fragmented across Europe and the terms can vary in different countries, Jörg Schürmann, managing director and head of debt advisory for the EMEA region at Jones Lang LaSalle in Frankfurt, warned: ‘Margins for senior core real estate loans, for example, can be higher in the UK at around 250 bps in London, compared to around 150 bps in Germany,’ he said.
BlackRock is the largest asset manager in the world with $3.67 tln of assets under management as of 30 September 2012. The portfolio covers real estate, equity, fixed income, cash management, alternative investment and advisory strategies.
