A UK-based investment firm, Gravis Capital Partners LLP, has announced it is launching its GCP Sovereign Debt Infrastructure fund, a $250m (£156m) debt infrastructure fund to provide financing for major power and water projects in the Gulf.

GCP, which plans to list the fund on the London stock market by December, has partnered with frontier markets investment bank Exotix on the new vehicle. The fund will be run out of Dubai, led by Exotix' chief executive Philip Southwell.

Sources reported yesterday that Stephen Ellis, a partner at GCP, expects to have invested the full $250m within six months of closing.

He said that the firm has already agreed terms with its core targets, which are major water desalination plants and power plants.

GCP plans to invest in subordinated debt unlike its UK vehicles, in projects with an operational track record of one to ten years, with a particular focus on Saudi Arabia and Abu Dhabi. The debt will primarily be on floating rates linked to the three-month US dollar Libor, with sovereign-backed cash flows.

Once fully invested, the trust will target an annualised dividend yield of the higher of the three-month US dollar Libor plus 6-7% or a flat 7%.

GCP launched an investor roadshow in the UK last week and has launched one in the Gulf this week, mainly aimed at institutional investors.

An investment trust focused on infrastructure projects in the Middle East is to launch in December.