Legg Mason Global Asset Management, based in the UK, is set to launch a UK-domiciled infrastructure debt fund that will target global publicly traded debt securities issued by leading infrastructure businesses, which provide frequent, inflation-linked revenue streams and strong asset backing over the long term. The fund will target institutional investors.

The fund will be available from early March and it will be managed by Ian Justice - a portfolio manager at Legg Mason's global fixed income subsidiary Western Asset Management.

Ian Justice said a few days ago that he would like the fund to return more than 4% on a net of fees basis. He also highlighted that the fund will invest in businesses that have a "leading position" in their sector.

Around 75% of the fund's total asset value will be invested in core infrastructure debt securities (transport, distribution and transmission utilities, social housing, PFI/PPP concessions and telecommunications). The securities will be predominantly issued by European businesses, but international issuers will also be considered.

The remaining 25% will be invested in non-core assets (power generation, integrated utilities, renewable energy, telecommunication operators and stadiums).

Loans and secondary market may be up to 10% of the total asset value of the fund.

This is good opportunity for those infrastructure projects being financed in the capital markets. Up to date not many European PPP/PFI projects are following this line, but if the Europe 2020 Project Bond Initiative keeps progressing, this kind of funds may become more popular.