Mariner Investment Group has closed on two new client mandates, launching Mariner Infrastructure Investment Management (MIIM), Mariner's bank deleveraging and regulatory capital management investment business.
MIIM serves as portfolio manager for two investment vehicles: the International Infrastructure Finance Company Fund (IIFC), a USD350m comingled fund, and Mariner Breakwater, a USD100m fund-of-one.
MIIM aims to take leveraged exposure to loans, bonds, and other debt instruments associated with global infrastructure, energy, and transportation assets. Target investments are designed to enable banks to manage their balance sheet in light of new financial regulations, providing them with risk-transfer tools that optimise and enhance their regulatory capital and funding requirements.
Mariner established MIIM in an effort to capitalise on the opportunity set created by two significant investment themes: (1) tightened Basel III standards which have caused a dramatic shortfall in regulatory capital at banks, likely to persist over the next several years, and (2) an urgent need for additional infrastructure finance in markets around the globe.
The MIIM team's primary investment strategy will provide credit protection against certain losses in specific infrastructure loan portfolios. Mariner selects assets for these investments based on strict credit underwriting criteria, coordinated by an in-house team with significant infrastructure investment expertise.
By working with Mariner on the provision of credit enhancement on a loan portfolio, a bank may typically reduce its Basel III risk exposure, freeing up its balance sheet to be redeployed by the bank to help grow businesses or to off-set other capital needs. In exchange for providing the loss protection, the participating vehicle and its investors would typically expect to receive a portion of the loan spread for the life of the credit protection.
"Our new infrastructure investment mandates provide global project finance banks with innovative, customised, and attractive solutions for the management of risk weighted assets in their infrastructure, power, and transport loan books, thereby addressing a critical and unmet need within the financial sector," says Bracebridge Young, Mariner's chief executive officer. "We're hopeful that the uptake will be strong; on the back of IIFC's initial close, we have already completed our first investment with a major European project finance bank."
Investors include a diverse group of institutional investors, including public and private pension funds, a large charitable trust, and affiliates of Mariner for their own accounts. Over a half dozen institutional investors participated in the initial capitalisation of the vehicles, the majority of which are first time investors with Mariner.
Young says: "Mariner will continue to provide our investors with an attractive, timely, and value-added investment opportunity, reflecting our unique combination of asset class expertise and structured credit know-how. In addition, like all of our investments, this line of business is supported by Mariner's rigorous, best-in-class risk management and strong credit culture."
MIIM's management team is led by Andrew Hohns, who oversees a group of six dedicated investment professionals with more than 90 years of combined experience in infrastructure finance.