The three-strong team ? who have worked together for more than 10 years, latterly at Blackstone?s GSO division ? will invest in investment grade infrastructure debt investments secured by transportation, social infrastructure and regulated utilities assets.
BlackRock will also seek to buy performing infrastructure single loans and loan portfolios from de-leveraging bank with infrastructure assets.
Benaroya and Wrenn will jointly head up the London-based European Infrastructure Debt investment unit, which falls within BlackRock?s Alternative Investors (BAI).
Once BlackRock has established a track record, the global fund manager will eventually seek to raise an third party capital for a multi-investor European infrastructure fund.
BlackRock is looking to establish a scalable business over time and will consider investments in France, Germany, the Benelux countries, the UK as well as euro-denominated Scandanavian assets, over five to 25 years on both a fixed and floating rate basis.
Given the flexibility of investments sought, within investment graded parameters, margins will vary but a guidance of at least 300 basis points over either EURIBOR, LIBOR or the relevant gilt benchmark is indicated.
BlackRock said the new focus for the global asset manager is in response to institutional client demand to channel capital into new build infrastructure projects and secondary loan investments in a search for increased yield amid a low interest rate environment.
The low correlation to other asset classes is expected to increase the appeal of infrastructure debt to traditional liability-matching fixed income investors.
Matthew Botein, head of BAI, said: ?Investors are looking for increased yield, and to exploit new investment opportunities resulting from global de-leveraging.
?We expect to see a continuation in the robust growth in the infrastructure market.?
Botein said the OECD estimates market size at US$3 trn by 2018 and $50trn by 2030, and alternative investments have doubled as a proportion of the institutional investment market in the last seven years.
He added: ?Hiring this team is an exciting and significant development which helps us develop this burgeoning market and adds a first-mover advantage to BlackRock?s current service provision in Europe.?
Benaroyn and Wrenn join as managing directors co-head of European Infrastructure Debt, while Lengaigne joins as director. Benaroyn has 18 years of infrastructure and project finance experience, while Wren has worked in infrastructure and structured finance for over 25 years and Lengaigne?s experience totals a decade.
David Lomas, head of BlackRock?s Global Financial Institutions Group, said: ?This new platform is the right service at the right time. Solvency II is proving a major catalyst for insurers in this new world of market volatility and low interest rates as they search for alternative sources of income to meet their liabilities.
?Research undertaken by BlackRock earlier this year suggests insurers may look to increase their allocation towards alternative asset classes to achieve this. The characteristics of infrastructure debt make it an ideal strategy to help them in this search for diversified income.?
jwallace@costar.co.uk
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