Schroders is today announcing that it has raised €312 million for the first close of its Schroder Euro Enhanced Infrastructure Debt Fund II (Julie II).
The fund, which is managed by Schroder Aida - the group's specialist infrastructure finance team, was launched in Q1 2020 and aims to invest in European sub investment grade debt opportunities with a target of raising €750 million in total.
It is the second vintage of this strategy whose first fund (Julie) was launched in 2017 and raised almost €350 million. This was almost fully deployed within two years.
Julie II focuses on mid-sized brownfield core assets based in Europe, with an emphasis on delivering diversified debt exposure across countries and sectors. These entail assets which provide essential services, are capital intensive with high barriers to entry, have a long economic life, deliver long-term cash flows, benefit from regulated markets and have low technological risk.
Examples of these opportunities encompass water and energy companies, railways, renewable energy portfolios, electricity grids and roads. The fund also integrates environmental, social and corporate governance (ESG) factors into its investment process.
Infrastructure debt is an increasingly attractive asset class for institutional investors due to its defensive nature. In particular, sub-investment grade infrastructure debt enables healthy yields to be captured in the low interest rate environment, while maintaining a stronger credit profile than other assets with similar ratings.
Investors from Asia and Europe supported this close, bolstered by a strong re-up rate from clients in the first vintage, particularly insurance companies.
Augustin Segard, Head of Enhanced Infrastructure Debt and Fund Manager, commented:
“The strong investor appetite seen for this fund underlines the resilience and strength of both the demand by our clients and also the performance of the asset class through the Covid-19 crisis so far.
“We continue to see exciting investment opportunities in the sub-investment grade infrastructure debt space and we expect to deploy this second vintage as efficiently as the first fund.”
Peter Arnold, Schroders’ Head of Private Asset Sales, commented:
“This is a great milestone for Schroders’ Infrastructure Finance team as we have raised nearly 50% of our target raise of €750 million in the first close.
“We are also very pleased for the support and trust shown by our existing global partners as well as new clients that have joined this first close, as we look to deliver investment performance that meets their needs.”
Schroders' Infrastructure Finance division, which now comprises 19 people, has grown steadily since its creation at the end of 2015, raising more than €3 billion in debt and equity from European and international institutional clients*.
In December 2019, Frédéric Brindeau joined the team in the newly-created position of Head of Asset Management and ESG, in charge of monitoring all assets, reporting, ESG analysis and valuations for the division.
*As at 31 December 2019
 A Luxembourg Reserved Alternative Investment Fund.