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HSBC Holds First Close on Third Infrastructure Fund

(ReuterS) – HSBC said on Wednesday it had reached its first close on its fourth infrastructure fund, raising more than half of its $1 billion target in what is still seen as a tough environment for infrastructure investors.

The bank said the unlisted fund, called HSBC Infrastructure Fund III, which has a mandate to invest globally, has received commitments totalling $580 million from a small number of investors who have invested in HSBC’s previous infrastructure funds.

Global infrastructure fundraising dropped by more than half in 2009 from 2008 as investors moved into more liquid assets. At the same time, increased competition for investors’ money has put pressure on fees for unlisted funds. [ID:nN24139111]

Multibillion dollar funds have struggled to reach their fundraising targets, while smaller infrastructure funds, more focused on particular sectors such as social infrastructure or renewable energy, have fared better. [ID:nLDE6211EY]

HSBC did not disclose how long its latest infrastructure fund has been seeking funds. It said the fund had a pipeline of opportunities in tender or preferred bidder stage across social, rail and road infrastructure.

“We believe global infrastructure markets will continue to grow, driven by a number of factors including infrastructure investment deficits and public budgetary constraints,” Werner von Guionneau, chief executive of HSBC Specialist Investments, said in a statement.

The fund is targeting investor returns of 15 percent per year after taxes, fees and costs over its life. It is currently the preferred bidder on a government accommodation project in Canada and the Singapore National Sports Hub, HSBC said.

HSBC’s first infrastructure fund, HSBC Infrastructure Company (HICL.L) has been listed since 2006. HSBC has also sponsored HSBC Infrastructure Fund II, which is invested in 22 projects, and the HSBC Environmental Infrastructure Fund.

By Greg Roumeliotis
(Editing by Karen Foster)