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DWS taps into infrastructure boom with new $2.7 billion fund - sources

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By Pamela Barbaglia and Arno Schuetze

LONDON/FRANKFURT (Reuters) – Deutsche Bank’s <DBKGn.DE> asset manager DWS <DWSG.DE> is in talks to raise at least 2.5 billion euros (2.23 billion pounds) for a new infrastructure fund, three sources told Reuters, tapping into strong investor demand for the asset class.

DWS, 79.5% owned by Deutsche Bank, aims to reach the first close of the fund soon after the summer, the sources said, speaking on condition of anonymity.

The fund is expected to beat its 2.5 billion euro target, securing slightly more than 3 billion euros ($3.34 billion) with a first close of almost 1.5 billion euros to be announced towards the end of September, the sources said.

The new fund, known as PEIFIII, will be launched next year, they said.

A DWS spokesman declined to comment.

The plan comes as several international investment firms, including Australia’s Macquarie <MQG.AX> and France’s Ardian, have also recently raised new mega funds taking advantage of investors’ confidence that infrastructure will deliver strong returns in a low interest rate environment.

DWS, which last month bought Belgian public transport operator Hansea, is primarily targeting infrastructure investments in the transportation, telecoms and energy sectors, the source said.

It will also allocate part of its new fund to so-called “core plus infrastructure” which typically includes assets in adjacent sectors such as smart grids and services businesses.

The Frankfurt-based asset manager, which had 719 billion euros of assets under management as of June 30, raised 1.8 billion euros in 2017 for its second pan-European infrastructure fund along with an additional 800 million euros allocated to co-investments.

The company, which has a market value of around 6.2 billion euros, has been a prolific buyer of infrastructure businesses, bidding for anything from motorways and airports in countries including Britain, Germany and Italy.

It recently expressed interest in taking control of British rail and bus firm Arriva which is in the process of being auctioned off by owner Deutsche Bahn.

Earlier this year, DWS teamed up with Dutch pension fund PGGM for a 26 percent stake in German utility EWE, with final bids due in September, sources previously said.

DWS’s fundraising follows last month’s closing of Macquarie’s sixth European Infrastructure Fund with 6 billion euros of committed capital which went well beyond its initial target of 5 billion euros.

French investment firm Ardian raised 6.1 billion euros for its fifth fund in March, taking less than six months to fulfil its fundraising ambitions.

(Editing by Jane Merriman)

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