George Osborne hard hat
Britain's Chancellor of the Exchequer George Osborne wears a hard hat during a visit to the Riverlight construction site in central London.Reuters

A fund manager is to launch an investment fund which could be worth £500m to the UK's infrastructure project pipeline.

Operated by Allianz Global Investors, the UK Infrastructure Debt Fund will allow institutional investors such as insurers to purchase portions of debt, which will finance civil infrastructure projects such as roads, schools hospitals, water and energy assets.

Allianz GI is the asset management arm of German financial services giant Allianz. The fund will seek to plug the gap in the infrastructure finance market left by banks, which have become less prominent in the space.

Chancellor George Osborne has spoken of the importance of institutional investors in the UK's forward project pipeline.

Allianz GI operates a European-wide infrastructure financing practice, but has been present on the ground in the UK for two years. The fund, however, is the first it has launched in this country.

A company spokesperson tells IBTimes UK: "The UK government's National Infrastructure Plan had highlighted a pipeline of hundreds of infrastructure projects across roads, rail, airports, ports, electricity, gas, communications, water, waste and flood defences that will require billions of pounds of investment by 2020. With infrastructure a priority but the public purse strings still tight, additional sources of investment can help ensure those major UK infrastructure projects become a reality."

The fund will be pitched at "buy and hold" investors: those who are willing to hold their investment for the long-term, but who wish to recoup the sort of stable income infrastructure investment can provide.

Nippon Life, the Japanese insurance company, is the only fund investor whose details have been made public.

Independently of this fund, Allianz GI has raised €2bn from clients for investment in eight European infrastructure projects, among which is the M8 road project in Scotland. It is understood that the firm has a pipeline of projects ~either at the tender stage or close to completion".

Deborah Zurkow, the company's CIO of infrastructure debt, describes the launch as "a significant moment for infrastructure funding in the UK".