Infrastructure demand leads to GCP fund launch
Gravis Capital Partners (GCP) has announced its first open ended fund in the area of UK infrastructure investment – VT UK Infrastructure Income Fund – which is a UK Financial Conducct Authority authorised Ucits IV vehicle.
GCP said the fund has come about because of demand expressed by investors in its existing closed ended infrastructure investment funds, as well as because of ongoing investment opportunities it sees in the sector.
The fund will invest in the UK’s listed infrastructure sector, where assets offer diversified income streams and low to no correlation to traditional asset classes.
The types of infrastructure being sought out include schools, hospitals, and utilities related infrastructure such as electricity production and transmission; GCP argues that these will be required regardless of the prevailing climate on capital markets, and that the contracts underlying provision of such infrastructure assets offer access to inflation indexed returns.
Additionally, GCP notest that because of the vehicle structure and the listed assets it will invest in, the fund will qualify for inclusion in offshore bonds – the type of product typically offered by international life offices to ex-pat investors.
Other open ended infrastructure funds exist, GCP aknowledges, but points to possible higher volatility in products that face more currency or other risks, for example, because they are more focused on emerging market infrastructure.
Stephen Ellis, senior partner of GCP LLP, the advisers on the fund, and William MacLeod owner of Highland Capital Partners, the distributor, said that the fund would be run in a defensive manner.
“It is not there to double somebody’s money over six months or a year. It is there to deliver a stable, secure non correlated return over the long haul.”
The fund is targeting an annual dividend return of 5% on its £1 per share launch price – it launches on 25 January, with an offer period starting on 18 January.