The firm is to establish a £500m fund that will invest in debt rather than the equity of infrastructure assets as banks continue to tighten their lending criteria thanks to more stringent banking requirements.
Barclays Corporate is taking advantage of the Basel III rules that essentially require banks to hold greater levels of capital that will have a negative impact on subsequent loans for, among others, large-scale government-run infrastructure projects.
The bank said its Barclays Senior Debt Infrastructure Fund I would have a target size of £500m and will invest in social infrastructure, economic infrastructure, renewable energy, electricity transmission and waste-to-energy senior debt. It will have exclusive access to such projects funded by Barclays Corporate and be seeded with £200m of internal monies.
Public and private sector funding is limited given the current fiscal constraints and with £200bn of infrastructure projects planned in the next five years, these projects will struggle to raise the much-needed cash, Barclays said.
David Cooper, head of infrastructure debt at Barclays Corporate, said:"We expect to see institutional investors supporting the modernisation of significant elements of public infrastructure whilst gaining long-term exposure to this attractive asset class."
