By Conor Humphries
DUBLIN, Nov 10 (Reuters) - Ireland is seeking to raise 700 million euros ($951 million) from investors for a 1 billion euro fund to invest in infrastructure projects as the government slashes its capital budget under an EU-IMF bailout programme.
Ireland’s state-run pension fund will put 250 million euros into the Irish Infrastructure Trust and a further 50 million has been pledged by Irish Life Investment Managers, the investment arm of a state-controlled bancassurer, which has created the fund.
“What we are looking for are investors who are long-term, who are looking to some extent for inflation-proofed assets,” Gerry Keenan, chief executive of Irish Life Investment Managers, said in an interview with Reuters.
Keenan said the assets “would develop cash streams over time linked to the growth of the economy and linked to the level of price inflation that there is in the economy.”
Potential investors would have to be prepared to lock their money up for at least 5-7 years. The fund will potentially look at investing in assets the government puts up for sale over the next few years as part of its EU-IMF bailout.
The government is targeting at least 2 billion euros in sales, with a minority stake in its state-run energy company on the block and the possible disposal of a 25 percent stake in airline Aer Lingus under consideration.
“We would expect that whatever assets the government is going to sell over the next number of years the fund will be evaluating them as potential investments. But it will be an arm’s length evaluation,” said Keenan.
AMP Capital, part of Australia’s largest wealth manager AMP , will manage the fund, ensuring its independence from the government, Keenan said.
Ireland is cutting back on capital spending as part of efforts to get its budget deficit, one of the worst in Europe, under an EU target of 3 percent of GDP by 2015 from around 10 percent this year.
After spending 70 billion euros on capital projects and research and development over the past decade, Ireland is targeting a 17 billion outlay over the next five years, and has shelved plans to build a rail link to Dublin airport and an underground railway network for the capital.
“The reality is that the country simply cannot afford to do everything we might like to do,” Prime Minister Enda Kenny told a news conference. “Ultimately, the future of new investment in infrastructure will be best delivered by regaining our economic sovereignty, by fixing our national finances and restoring our international reputation.”
Around 200 million euros had already been spent on planning the shelved projects, the government said.
Kenny is planning nearly 8 billion euros in spending cuts over the next four years with nearly 20 percent of that coming from the capital budget.