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AMP Capital closes infrastructure debt fund at $2.5 billion

AMP Capital closed its mezzanine debt strategy, AMC Capital Infrastructure Debt Fund III, at $2.5 billion, said Andrew Jones, global head of infrastructure debt at the firm.

The fund surpassed its $2 billion target, and also secured an additional $800 million in co-investment rights. A further $800 million was secured from investors who want access to deal capabilities.

AMP Capital Infrastructure Debt Fund II closed in November 2014 at $1.1 billion. The first iteration of the fund closed in 2012 and raised $500 million globally.

Mr. Jones said in a telephone interview the types of investors in the fund generally fall into one of two categories. "We have many who are familiar with the infrastructure asset class, have existing programs and see this as a complementary additive to that alongside infrastructure equity programs or senior infrastructure debt programs. The fact we're wholly yield-focused, more defensive than equity infrastructure in that space, (means) investors can look to ours as a defensive complement."

The second type of investor is found typically across the Asia investor base, "where they're new to infrastructure investing as an asset class and are typically more conservative. For them, starting with a debt strategy rather than equity is seen as a nice way to dip their toe in the water, a conservative approach to eventually build out an infrastructure investment program that will probably include equity in the future."

Mezzanine infrastructure debt is a less crowded space than senior infrastructure debt, he said. "Those are typically investment-grade rated, long-dated, almost a sovereign bond substitute type (of) approach. We're a little out on the risk curve — less than equity, a bit more than a senior (debt) strategy. That is a relatively uncrowded space," said Mr. Jones.

The fund attracted commitments from more than 125 investors across 12 countries. The 1.8 billion ($2.3 billion) Northamptonshire County Council Pension Fund, Northampton; 3.7 billion East Riding Pension Fund, Yorkshire; and 2 billion Cambridgeshire Pension Fund, Cambridge, committed more than $100 million to the fund.

The fund has a four-year investment period.