Union Investment and Mercer Private Markets have raised €442 mln from institutional investors, mostly co-operative banks, for a new fund to invest in infrastructure.
The UniInstitutional Sachwerte SCS SICAV-SIF - Infrastructure-Invest 1 fund will invest in facilities such as communications, energy, utilities, waste disposal, transport and social infrastructure, primarily in western Europe and North America.
Subscriptions to new equity funds will account for at least 50% of portfolio investments, although investments in established infrastructure funds in secondary markets will also be considered to open up additional potential for returns. Overall the fund expects to invest in more than 100 projects.
Julia Schiffer, co-portfolio manager of the infrastructure fund at Mercer Private Markets AG, said: 'Diversification is essential in the current environment in order to ensure a stable and fluctuation-resistant infrastructure portfolio.'
The subscription phase for the fund completed on schedule in April. The term of the fund is 14 years with a two-year option to extend and a target return of six to eight percent per annum.
Union Investment will manage the new fund, including structural and product management, as well as handling the legal side and reporting.
'The high demand for our new fund underlines the need for institutional investors to invest alternatives, not just in a low interest rate environment,' said Mirko Häring, head of alternative investment products at Union Investment. 'Infrastructure investments offer long-term investors the opportunity to increase their return and are relatively independent of economic developments.'
Mercer Private Markets employs more than 100 professionals in more than 10 offices worldwide and currently manages total assets of around US$20 bn (€17.8 bn).
