The challenging nature of the global market downturn and the lack of available project financing has led to the emergence of a new type of infrastructure vehicle; the infrastructure debt fund. Chicago-based firm, Global Infrastructure, is planning to launch such a vehicle to provide mezzanine and long-tenor debt loans to infrastructure projects. The infrastructure fund will target USD 200 million in equity commitments and seek to combat the decline in available capital for public private partnership (PPP) projects in North America and Western Europe. It will also consider making senior debt investments on the secondary market.
Global Infrastructure is planning a series of infrastructure debt funds in the coming years with other recognised infrastructure fund managers rumoured to be doing the same. The current market conditions and lack of bank debt have resulted in increased demand for mezzanine debt financing, creating a unique opportunity within the infrastructure sector. Subsequently, infrastructure firms are seeking to capitalise on market volatility in order to maximise returns for investors.
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