Reinsurer Swiss Re is to back long-term financing of infrastructure projects committing an initial US$500m for investments in senior secured debt of infrastructure businesses and assets located primarily in northern Europe.
The group said that institutional investment in such large-scale projects is expected to rapidly grow in importance as traditional sources of financing in the European infrastructure market, lending by states, governments and banks, are increasingly scarce. Investments in infrastructure debt offer an alternative for long-term investments in other assets, such as government bonds where recent yields have been very low.
“We expect the market to evolve substantially over the next few years and are excited to participate in this development,” said Klaus Weber, Swiss Re’s managing director and head of external investment mandates. “With its particular characteristics, infrastructure debt fits well with our asset and liability management approach and provides attractive long-term investments, well aligned with our balanced investment strategy.”
For sourcing and managing the investments, Swiss Re has awarded a mandate to Australian financial services group Macquarie after a due diligence process. The mandate is the first to be launched by Macquarie’s new infrastructure debt investment solutions (MIDIS) business platform. MIDIS will deliver infrastructure debt investment opportunities to long-term institutional investors, underpinned by Macquarie’s position as a global infrastructure specialist.
“We are delighted to work with Macquarie in what is an important initiative for us and are confident it will give us access to high quality assets and deliver favourable risk adjusted returns,” said Weber.
James Wilson, senior managing director and chief executive officer (CEO) of MIDIS, added: “The launch of the MIDIS platform will leverage Macquarie’s unrivalled global infrastructure expertise and relationships and provide long-term investors the opportunity to access stable and superior risk adjusted returns. It is an asset class which lends itself well to insurance companies and pension funds seeking robust long-dated assets to match their long-term liabilities.”
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