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UBS raises US$637m for Europe infrastructure debt fund

Tuesday, September 20, 2016 - 20:47
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UBS Group AG'sasset management unit raised 570 million euros (S$858.6 million) for its first European infrastructure debt fund, seeking to take advantage of a shortage of finance while banks shrink their balance sheets.

[LONDON] UBS Group AG'sasset management unit raised 570 million euros (S$858.6 million) for its first European infrastructure debt fund, seeking to take advantage of a shortage of finance while banks shrink their balance sheets.

UBS raised money from 17 investors, including pension funds and insurers in Europe and Japan, according to Tommaso Albanese, head of infrastructure debt at UBS in London. The Archmore Infrastructure Debt Platform has already advanced 220 million euros for deals in Spain, Belgium, Scandinavia and France.

The manager is not considering any UK deals at present but will continue to examine investment opportunities following the vote to leave the European Union on a case-by-case basis, he said.

The "uncertainty and volatility created by Brexit does not currently offer a suitable risk return profile for a euro-based long-term debt investor such as Archmore," Mr Albanese said.

Asset managers are creating funds for higher-yielding investments including infrastructure and real estate debt to help meet increasing liabilities at pension funds and insurers because of low interest rates. The UBS fund will finance infrastructure projects in industries including renewable energy and transportation, Mr Albanese said.

The fund's deals so far have been at an average gross yield of more than 3.75 per cent, the manager said. That compares with about zero per cent for a German 10-year bond.

"Among investors, we see a strong and growing interest in alternatives," UBS Asset Management President Ulrich Koerner said in a statement.

"Infrastructure debt is an attractive alternative asset class that offers stable, long-term cash flows."

BLOOMBERG

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