UBS closes $1.5bn debut infrastructure fund

Citing 'exceptional client demand' for its initial foray into infrastructure, the institutional asset manager may seek to raise a second fund in 2009.

UBS Global Asset Management, the asset management arm of Switzerland-based investment bank UBS, has closed its debut infrastructure fund on $1.5 billion.

The UBS International Infrastructure Fund will have a minimum investment period of 15 years and target direct investment opportunities in Organisation for Economic Cooperation and Development (OECD) member states, such as the UK.

The fund close is the latest in a wave of fundraising success in the infrastructure sector, which has continued to see demand from investors despite turbulent economic conditions. In the first nine months of the year, $21.5 billion was raised for infrastructure funds, a pace that falls short of 2007's record fundraising pace but already in excess of the 2006 total, according to data gathered by placement agent Probitas Partners.

“Due to the exceptional client demand for the UBS International Infrastructure Fund, I envisage that a similar strategy will be launched in 2009,” said John Fraser, chairman and chief executive officer of UBS Global Asset Management, in a statement.

The investor base for the fund is comprised of institutional investors from across North America, Europe, the Middle East and Asia Pacific.

To date, the fund has already acquired stakes in three infrastructure investments. In the US, it acquired a 50 percent stake in Northern Star Generation, a power utility, in 2007. In the UK, it bought an 18 percent stake in Southern Water, a UK water utility, in 2007. In Austria, it owns a 28 percent stake in waste management company Saubermacher, which it acquired in June.

UBS' Infrastructure Asset Management team 25-member investment team will manage the fund. The investment team is headquartered in London with staff in New York, Hong Kong, Tokyo and Sydney.

The Infrastructure Asset Management is located within UBS Global Asset Management, which had invested assets totaling $741 billion as of 30 June, making it one of the largest institutional asset managers in the world.