UBS Raises $1.5 Billion Infrastructure Fund

HONG KONG, Nov 3 (Reuters) – UBS AG (UBSN.VX: Quote, Profile, Research, Stock Buzz) said on Monday its new infrastructure fund raised a higher-than-expected $1.5 billion, with investors attracted by the prospect of stable, inflation-resilient returns amid global financial turmoil.

The bank, which last month took an emergency injection of funds from the Swiss government to shore up its capital base, said response to the fund had been so positive that it was considering launching a similar vehicle next year.

“The growth of the Infrastructure Asset Management business also provides a great platform for us to expand our alternatives business into private equity and we expect to announce shortly investment solutions for institutional investors in this field,” UBS Global Asset Management Chairman John Fraser said in a statement.

The statement did not mention what the target for the fund had been and UBS did not immediately respond to queries on the matter.

Fraser said the fund’s investors include major institutions from North America, Europe, the Middle East and Asia-Pacific.

The UBS International Infrastructure Fund, which raised more than $1.5 billion in committed capital, is now closed to new investors.

The fund will invest client money for a minimum of 15 years in sectors such as transportation, utilities, energy and social infrastructure in Organisation for Economic Co-operation and Development countries.

With the global financial crisis and prospect of worldwide slowdown hammering equity markets, investors have been looking for more stable themes such as infrastructure. While capital intensive, many investors see infrastructure investment as less correlated to the returns of other major asset classes.

In May, Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) and a fund set up by General Electric (GE.N: Quote, Profile, Research, Stock Buzz) and Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) raised nearly $10 billion collectively to invest in infrastructure projects around the world.

The UBS fund has already acquired stakes in U.S. power provider Northern Star Generation, Britain’s Southern Water and Austrian waste management company Saubermacher. (Reporting by Jeffrey Hodgson; Editing by Anshuman Daga)