Macquarie Infrastructure Debt Investment Solutions has recently revealed that it is launching its second fund mandated to invest inUK inflation-linked infrastructure debt.
The launch follows Macquarie Infrastructure Debt Investment Solutions successful £829 million close of the first ever UK inflation-linked infrastructure debt fund, Macquarie Infrastructure Debt Fund (UK Inflation Linked), which is now in the latter stages of deployment.
The Macquarie Infrastructure Debt Fund (UK Inflation Linked) 2 is targeted at UK pension schemes seeking to invest a minimum of £10 million into debt to match their long-dated inflation-linked liabilities over a 30-year term.
Similar to its predecessor, this fund will follow a buy and hold investment strategy which aims to achieve returns in excess of traditional liability matching strategies. This appeals to pension schemes’ increasing appetite to use illiquidity premium as a source of returns, rather than the more traditional bar-bell strategies
comprising of large allocations to equity and gilt investments.
Macquarie Infrastructure Debt Investment Solutions identified an opportunity in early 2014 for pension schemes to lend directly to UK infrastructure businesses in inflation-linked form. The inflation linked fund removed the barriers to pension scheme participation and the success of the first pooled fund has proven the scale of the opportunity.
Tim Humphrey, Managing Director of MIDIS, said:
“The launch of our second fund of this type reflects how an inflation-linked debt investment strategy is an effective solution for UK pension schemes needing to de-risk, deliver returns and achieve portfolio efficiencies. This demand from institutional investors is met by the supply of UK infrastructure borrowers seeking flexible and cost-effective debt funding solutions - which mitigates the execution risk posed by public markets and avoid banks’ variable Macquarie Group of Companies appetite for infrastructure finance. We look forward to receiving similar investor enthusiasm for MIDIS’ second inflation-linked infrastructure debt fund in the UK.”