Barclays Capital Completes £645M ($1.03B) Infrastructure Fund

(Reuters) – Barclays Capital (BARC.L: Quote, Profile, Research, Stock Buzz) has completed fundraising for a 645 million-pound ($1.03 billion) infrastructure fund, it said on Monday, that will invest in recession-proof social infrastructure projects such as schools, hospitals and prisons.

Social infrastructure is considered to be the among the safest of infrastructure assets because cash flows are backed by governments and depend on the availability of the schemes rather than demand by users, as in the case of toll roads or ports.

Dubbed Barclays Integrated Infrastructure Fund, the fund will focus on generating long-term yield, around 10 percent net on average, as opposed to the capital appreciation model seen in its previous five infrastructure funds, Barclays said.

“We are delighted to have reached final close at this level in what has been recognised as a very difficult market. It represents how the asset class has grown and its importance in a diversified portfolio,” Chris Elliott, head of Barclays Infrastructure Funds, said in a statement.

Global unlisted infrastructure fundraising dried up in 2009 as institutional investors, such as pension funds and insurers, moved into more liquid assets in reaction to the financial crisis. [ID:nLDE69525E]

But the appetite has since started to recover. The sixth Barclays infrastructure fund was launched in May 2008 and had an initial fundraising target of 800 million pounds. It has invested to date just under 400 million pounds.

The latest Barclays infrastructure fund has attracted investments from corporate and local authority pension funds, insurance companies and asset managers of sovereign wealth funds, said the bank, whose infrastructure funds have some 1.2 billion pounds of assets under management.

The fund has been structured as a 15-year fund with the ability to convert into an evergreen structure, Barclays said. It has a portfolio of 84 concession-based projects whose operating life runs up to 25 years, it added.

The assets originate from the Infrastructure Investors I2 fund, which was launched by Barclays and Societe Generale (SOGN.PA: Quote, Profile, Research, Stock Buzz) in 2003. In January 2009 Barclays bought out Societe Generale and 3i Group (III.L: Quote, Profile, Research, Stock Buzz), which joined the fund in 2005.

The fund’s mandate allows it to invest in UK and euro zone social infrastructure. It will initially focus on investing in operational projects but will later seek exposure to greenfield projects which carry construction risk, Barclays said. ($1=.6274 pounds)

By Greg Roumeliotis, European Infrastructure Correspondent

(Editing by Greg Mahlich)