The closed-ended fund is looking to raise between £60m and £106m through the issue of 100m C class shares. Once the money has been 90% invested, which GCP expects to happen within the next four to six months, the C class shares will be converted into ordinary shares, taking the total number of ordinary shares in issue to 200m.
According to GCP partner Rollo Wright, the firm’s pipeline of potential investments is strong, with most investments offering a yield of around 8% and a term of around 10 years.
“GCP Infrastructure arose as a result of the banks fleeing from the very long dated banking sector. But, there remain plenty of other areas of the market that are poorly served by the banks.” he said, pointing to the rapid growth of the alternative lending space as proof.
“Banks are big beasts, they tend to have strict and rigid lending criteria and they can be challenging to work with. And, at the moment they are most comfortable lending two-year, three-year, maybe five-year money, so a 10-year term is not something they are terribly interested in.”
As a result of this, there is a clear space for an entity like Project Finance that targets UK projects where it can get security over either hard assets like buildings or contracted cashflows, like long dated leases.
And, said Wright, there is recurring interest: “Over half our pipeline is full of projects from people we have lent to before,” which he adds, helps GCP from a risk mitigation point of view.
At present the portfolio is 26% exposed to Asset finance, 26% to energy and infrastructure projects and 48% to property. And, Wright said, given the current pipeline, once the new money is fully invested, the make-up of the fund will look pretty similar.
The open offer for shares closes on 19 May, the placing and offer for subscription closes on 23 May, with the new shares expected to be admitted to the exchange on 31 May.