abrdn raises £220m with Inflation Linked Infrastructure Debt Fund launch

Written by Michael Griffiths

16/11/2022

abrdn has announced the launch of its Inflation Linked Infrastructure Debt (ILID) fund, an evergreen, UK-focused strategy for institutional investors.

ILID made its first close with commitments of £220m from local government pension schemes in the UK.

The fund draws on the combined strengths of abrdn’s fixed income platform and an £11bn private credit business that provides tailored solutions to clients’ long-term requirements.

According to abrdn, ILID aims to provide inflation protection combined with credit and illiquidity premia, allowing a capital-efficient, low risk way for investors to meet long-dated liabilities.

abrdn investment director, Alex Campbell, said that institutional investors are facing “challenges not seen in over a generation”.

“Liability matching assets that preserve a real rate of return, provide some shelter from public market volatility and have robust credit quality in times of economic downturns are in short supply,” Campbell commented.

“We are excited to launch the abrdn Inflation-Linked Infrastructure Debt Fund which seeks to address these challenges by combining inflation protection with access to high quality assets that can improve the UK’s national infrastructure.

“There is increasing demand from investors to allocate capital to assets such as wind or solar projects as we collectively work towards Net Zero targets and infrastructure offers some exciting investment opportunities.”

The fund will invest in a broad range of inflation-linked private infrastructure debt in the UK with a limited allocation to European assets. Target sectors include clean energy generation, storage and distribution, transport and social infrastructure. ILID will be managed by Campbell as well as Jeremy Allcock from abrdn’s Infrastructure Debt team.

abrdn also confirmed that it is working closely with LGPS Central Limited in the fund’s design, with ILID focusing on high quality investment grade infrastructure debt while also capturing additional illiquidity premium.

“We were delighted to work in partnership with LGPS Central,” Campbell continued. “Its involvement from day one ensures the fund really delivers a way to meet local pension schemes’ investment goals. The launch of this new fund also underpins a strategic priority for abrdn to grow our core capabilities in real assets.”

Investment director, private markets for LGPS Central, Mike Gillespie, added: “This is a strategic cornerstone investment, a first for our Stable Return private debt sleeve. It was really important to make sure that the design was not only a good strategic fit for us, but also marketable to other potential investors.

“We welcomed the highly collaborative mindset taken by the abrdn team, and the multi-disciplined approach across its platform which has undoubtedly resulted in a highly compelling proposition. Our view is that there is strong demand and supply drivers for a fund of this nature, and we look forward to a long and successful relationship with abrdn.”

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