Macquarie raises a further £770 million for UK inflation-linked infrastructure debt strategy in response to growing institutional investor demand for inflation protection
London, 20 Jun 2017
Macquarie Infrastructure Debt Investment Solutions (MIDIS), part of Macquarie Asset Management (MAM), has raised a further £770 million of commitments in the first half of 2017 to invest in UK infrastructure debt, bringing the total amount raised via the platform globally to £4.5 billion since 2012.
This includes the £80 million first close of MIDIS’ second UK inflation-linked infrastructure debt pooled fund (MIDF2), in addition to commitments raised through separately managed accounts.
MIDF2 is of particular interest to UK pension schemes seeking to invest into cashflow generating assets to match their long-dated inflation-linked liabilities over a 30-year term. The growth in demand for UK inflation-linked infrastructure debt comes as UK pension schemes seek alternative means of protecting ortfolios from rising inflation, in the face of historically low returns on index-linked gilts.
MIDIS has already made a number of investments on behalf of clients in 2017, and deployed substantial new commitments into the UK renewable energy and utilities sectors, including:
- The £100 million long-term fixed and index-linked debt refinancing of twenty-one solar plants [in the UK] for NextEnergy Solar Fund;
- The £140 million CPI-linked financing of [three] onshore wind farms in South Lanarkshire, Scotland and Darlington, North East England with the Durham-headquartered, Banks Renewables; and,
- The £377 million part-financing of an international institutional investor consortium’s (Quad Gas Group) acquisition of National Grid plc’s gas distribution business.
Underlining Macquarie’s commitment to innovating new financing structures to develop global infrastructure, MIDIS has invested £1.7 billion of inflation-linked debt into UK infrastructure alone since 2014 across a range of infrastructure sectors.
Andrew Robertson, co-head of MIDIS said: “As rising inflation continues to threaten the solvency of UK pension schemes, a growing number of scheme trustees and consultants are capitalising on UK inflation-linked infrastructure debt as a more economic means of matching inflation-linked liabilities. By raising a further £770 million in 2017 to date, we continue to offer our investors attractive yields and a superior long-term liability match.”
James Wilson, co-head of MIDIS said: “At the same time as providing inflation protection, infrastructure debt is now proven to provide a higher yield over investment in corporate bonds, as the markets dynamics in 2017 to date generate the highest ever level of yield enhancement for investors since MIDIS launched its infrastructure debt strategy in 2012. We look forward to supporting a healthy pipeline of UK infrastructure borrowers requiring flexible debt financing solutions as we seek to develop MIDIS’ infrastructure debt strategy further.”
MIDF2 will remain open to eligible investors and MIDIS expects to carry out further closes of the fund in the coming year.
In 2016, MIDIS completed the final close of the UK’s first ever inflation-linked infrastructure debt fund (MIDF1) – on which MIDF2 is closely modelled – with total commitments of £829 million from UK pension schemes. MIDF1 became fully deployed following completion of the Quad Gas Group’s financing in March 2017.
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About Macquarie Group
Macquarie Group (Macquarie) is a global provider of banking, financial, advisory, investment and funds management services. Founded in 1969, Macquarie employs more than 13,597 people in over 27 countries. At 31 March 2017, Macquarie had assets under management of £294 billion. For more information, visit www.macquarie.com.
About Macquarie Infrastructure Debt Investment Solutions
In early 2012, Macquarie established the Macquarie Infrastructure Debt Investment Solutions (MIDIS) platform to leverage the infrastructure expertise within Macquarie into an investor-aligned global infrastructure debt investment management business. The MIDIS platform has been successful in securing mandates with insurer and pension scheme clients and has a track record of investing at attractive yields.