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Pantheon to tap post-pandemic spending boom with £300m infra fund

Pantheon Infrastructure is seeking to tap a hoped-for boom in spending as governments recover from the pandemic, by raising a £300m investment trust listed on the London Stock Exchange.

London-headquartered Pantheon, which has investments in Bristol Water and Gatwick airport in the UK as well as in telecoms assets in the US and Europe, wants to sell 300m shares at £1 each for the trust to institutional and retail investors starting on Monday. Investec is advising on the deal.

The investment manager, which has £53.7bn under management, said it will use the money to buy assets including water, telecoms and rolling stock, all of which deliver a steady income stream. It is targeting returns of 8 to 10 per cent a year.

Pantheon said it wanted to benefit from what it predicted would be a “$13tn shortfall in capital expenditure globally needed to improve ageing infrastructure and build new projects by 2040”.

“There is a growing and substantial requirement for investment in a number of different infrastructure sectors globally, where private capital is playing an increasingly important role in adapting to key global trends such as the transition to a low-carbon economy, ” said Richard Sem, partner at Pantheon.

Demand for infrastructure funds has been growing over the past decade. Although fewer have closed this year the average size of funds is increasing and is now more than $1.2bn, according to Prequin, the data analysts.

David Lowery, head of research insights at Preqin, said investors were being drawn towards infrastructure assets to protect their portfolios from the effects of inflation.

Investors are hoping to receive a slice of government infrastructure spending, although no guarantee has been given that it will involve private sector capital.

In August the US Senate passed a $1tn infrastructure bill that will provide hundreds of billions of dollars to upgrade America’s crumbling transport systems, while Ireland unveiled plans earlier this month to pump a record €165bn into infrastructure projects by 2030.

In a sign of investor appetite, private equity fund KKR agreed a £2bn takeover deal in June for UK infrastructure investor John Laing. The company manages and invests in projects, many of which are public-private partnerships involving government bodies.

A number of private equity firms invested in infrastructure have also chosen to go public in recent months.

In July, Bridgepoint Advisers became the first private equity firm to list on the London Stock Exchange since 1994 through a float in which its value rose by more than a fifth on its stock market debut. France-based Antin Infrastructure Partners, one of Europe’s largest funds specialising in the asset class, also debuted in Paris last month.

Infrastructure investors such as Pantheon, Bridgepoint and Antin have broadened their scope in recent years and moved into areas such as healthcare, including care homes and special needs schools, as competition for traditional infrastructure assets has soared.

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