Edmond de Rothschild Asset Management is launching its second infrastructure debt fund as part of its ongoing development of the BRIDGE platform.
The new Luxembourg-regulated fund will have the same investment philosophy as the previous generation and is aiming to raise between EUR 400 million and 800 million.
A second BRIDGE platform fund (Benjamin de Rothschild Infrastructure Debt Generation) is being launched. It will be managed by the same team of 11 experts based in London. The fund seeks to broaden the range, capturing fresh opportunities, whether at the project or operational stage, which have been identified by the investment team and are available on the market. The fund is designed for all French and European institutional investors. Both BRIDGE platform funds will be able to join forces for co-investments that meet investment mandates.
The second BRIDGE fund will capitalise also on the strong pipeline of transactions available to its team across Europe, including in the UK where a few landmark transactions have already been closed in 2015 by the first fund. The BRIDGE platform will maintain a specific focus on addressing UK investment opportunities and investor interest.
The first BRIDGE fund was set up in August 2014 for French institutions like insurance companies, provident societies or mutuals. It has already made a number of investments and more are to come. It totals EUR 595m and has invested 71% of its commitments. In 18 months, it has invested EUR 420m, going well beyond its initial target, and now has a diversified portfolio of assets in conventional and renewable energy, road, rail and air transport and social infrastructure (healthcare and Private Finance Initiative or PFI deals) in France, Germany, Austria, Belgium and the UK.
With rates set to stay low for some time and amid ongoing banking disintermediation which has prompted the arrival of new players offering alternative funding solutions, investing in infrastructure debt creates opportunities for long term investors looking for yield. These investments provide institutions with a diversification tool.
Infrastructure debt benefits from robust fundamentals as assets have good credit ratings, low volatility, stable cash flow and long maturities. It also boasts highly visible yields which reflect a certain illiquidity premium. Most infrastructure assets are monopolies and provide essential services to their markets. They also benefit from political back-up and regulatory incentives.
Infrastructure funding is part of the Rothschild history. The family made a significant contribution to the funding of major projects like the Suez Canal or Europe’s railway network during the 19th century industrial revolution. Building on this tradition, the Edmond de Rothschild group has moved into advising on infrastructure financing. The BRIDGE platform's investment team results from this development.
