BlackRock to tap infrastructure debt demand

LONDON Mon Nov 26, 2012 11:04am EST

LONDON Nov 26 (Reuters) - BlackRock aims to lend clients' money to European infrastructure projects, as it seeks to tap rising investor demand for railways and roads and fill a financing gap left by retreating banks.

The world's largest asset manager said on Monday it is to launch a European infrastructure debt division that will lend to companies in sectors such as transportation and regulated utilities.

Infrastructure investments are increasingly popular among pension and sovereign wealth funds and insurance companies keen for stable, inflation-linked returns.

Research firm Preqin said $14 billion was raised by infrastructure funds during the three months to end-September, an increase of 33 percent over the previous quarter.

At the same time, governments are also keen to get more pension fund cash flowing into infrastructure projects, especially as capital-starved banks pull back from investing in major schemes.

The UK government, for example, is considering allowing local authority pension schemes to double the amount they can legally invest in infrastructure.

BlackRock has hired a team of three - Philippe Benaroya and Chris Wrenn, who will co-head the division, and Gilles Lengaigne - from rival Blackstone to run the new business from London.

"Investors are looking for increased yield, and to exploit new investment opportunities resulting from global deleveraging," Matthew Botein, Head of BlackRock Alternative Investors, said in a statement.

A number of institutional investors have sought to beef up their infrastructure offerings this year. Aviva Investors told Reuters last month it is preparing to launch a range of funds to invest in infrastructure products.

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