Stonebridge Financial Corporation has established the Stonebridge Infrastructure Debt Fund, a closed-end fund offered only to accredited investors, comprised primarily of Canadian pension funds with long-term investment horizons, and will be dedicated to making private debt investments in Canadian infrastructure projects. Fund investments will take the form of long-term, fixed rate, senior debt financing for the construction and operation of infrastructure and energy assets, including the emerging municipal infrastructure project sector.
As manager of the Fund, Stonebridge will leverage its market expertise, experience and relationships to provide Fund investors with access to this specialized segment of the debt market, to generate predictable investment cash flows and premium returns. To date, this market has been primarily serviced by life insurance companies and larger pension funds.
The Fund was developed in close cooperation with PBI Actuarial Consultants Ltd., and with the support of PPP Canada Inc. “In the current low interest rate environment and given the turbulence in the capital markets, the security, liability matching characteristics and the return potential of infrastructure debt is quite attractive” states Tony Williams, president of PBI. “These investments in the social use space are unique in that their credit quality is not dependent on the economy. PBI saw the potential advantages for long term investors in infrastructure debt, but there were no similar funds in the market. After our market research, we identified Stonebridge as a preferred partner for our clients and outlined the design features that would be required for a successful pension fund investment. Stonebridge was successful in developing their fund and has received strong support from PBI clients. “
The size of the Fund, subject to the receipt of applicable regulatory approvals, is expected to be in excess of $350 million, with an initial closing ($200+ million) scheduled for mid-December, based on capital commitments by various pension fund clients. A subsequent closing will occur in mid-2012 to accommodate other interested investors.
“We are pleased to have had the opportunity to assist Stonebridge in the creation of this Fund,” said John McBride, CEO of PPP Canada, “Access to financing is an important part of P3 transactions and funds such as these will help develop the Canadian market.”