Swiss Re to invest $500 mln in infrastructure

LONDON Wed Nov 28, 2012 11:59am EST

LONDON Nov 28 (Reuters) - Swiss Re is to invest $500 million in infrastructure projects, the latest investor to seek out stable returns by buying into assets such as roads, railways and utilities.

Australian asset manager Macquarie will run the money for the reinsurance group, investing in senior debt - money that a company must repay first if it goes bankrupt - issued by infrastructure businesses in northern Europe.

Infrastructure is an increasingly popular asset class for investors as yields on government tumble to record lows.

As politicians across Europe seek to cut budget deficits, Britain is among those encouraging private sector investment to fund projects such as building hospitals and power plants.

"Infrastructure debt fits well with our asset and liability management approach and provides attractive long-term investments," said Swiss Re Managing Director Klaus Weber.

The focus would be primarily in Britain, France, Germany and the Nordic countries, Macquarie Infrastructure Debt Investment Solutions (MIDIS) said on Wednesday.

James Wilson, senior managing director and CEO of MIDIS, told Reuters a range of infrastructure projects were of interest to Macquarie, including private finance initiative (PFI) schemes where private money funds public works.

Wilson said Macquarie's focus would be on a combination of new projects and re-financings.

"We're not really focused on buying debt in the secondary market, although those opportunities do come up from time to time where banks are actually selling loans that they own," he told Reuters.

The world's largest asset manager, BlackRock Inc, said on Monday it was launching a European infrastructure debt division that would lend to companies in sectors such as transportation and regulated utilities.

The deal with Swiss Re is the first foray into infrastructure debt for the investment arm of Macquarie Funds Group, which manages over $350 billion of assets.

"Our expectation is that there is a lot of interest in this sector from long-term investors like pension funds and insurance companies and so we see that it's a market that has the opportunity to have quite big volumes," Wilson said.