First close at EUR 312 million for Schroders Euro Enhanced Infrastructure Debt Fund II

Schroders has raised EUR312 million (USD 364 million) for the first close of its Schroder Euro Enhanced Infrastructure Debt Fund II (Julie II).

The fund, which is managed by Schroder Aida - the group's specialist infrastructure finance team, was launched in Q1 2020 and aims to invest in European sub-investment grade debt opportunities with a target of raising EUR750 million (USD 874 million) in total.

It is the second vintage of this strategy whose first fund (Julie) was launched in 2017 and raised almost EUR 350 million (USD 408 million). This was almost fully deployed within two years.

Julie II focuses on mid-sized brownfield core assets based in Europe, with an emphasis on delivering diversified debt exposure across countries and sectors. These entail assets that provide essential services, are capital intensive with high barriers to entry, have a long economic life, deliver long-term cash flows, benefit from regulated markets and have low technological risk.

Examples of these opportunities encompass water and energy companies, railways, renewable energy portfolios, electricity grids and roads. The fund also integrates environmental, social and corporate governance (ESG) factors into its investment process.

Infrastructure debt is an increasingly attractive asset class for institutional investors due to its defensive nature. In particular, sub-investment grade infrastructure debt enables healthy yields to be captured in the low interest rate environment, while maintaining a stronger credit profile than other assets with similar ratings.

Investors from Asia and Europe supported this close, bolstered by a strong re-up rate from clients in the first vintage, particularly insurance companies.

Schroders' Infrastructure Finance division, which now comprises 19 people, has grown steadily since its creation at the end of 2015, raising more than €3 billion in debt and equity from European and international institutional clients.