UBS Asset Management’s infrastructure team has continued to shrink with the departure of head of infrastructure equity Andrew Morris and senior executive Borja De Luis amid slow fundraising activity, sources familiar said, while director David Thoma is set to leave the infrastructure debt arm.

Morris exited less than three years after joining the firm from CPP Investments, where he was a managing director, while De Luis, who worked as head of origination and execution for Europe, spent more than seven years at the business. The sources said the moves were “mutually agreed”.

Meanwhile, Thoma is leaving the debt unit after just over five years at the firm to join another infrastructure credit fund, the sources said.

Their departure comes months after that of Tommaso Albanese, the long-standing global head of infrastructure equity and debt, who retired last April.

It also follows years of slow fundraising activity for the infrastructure equity business, which closed its last flagship fund, Archmore International Infrastructure Fund III, in 2022 at below EUR 400m, against a EUR 1bn target.

The manager has more recently sought to raise a co-invest vehicle, called European Infrastructure Parallel Fund, for some of its high-growth companies – French fibre business Altitude Infrastructure and Germany’s Northern Fibre Holdings – with the option to invest in a further three or four companies.

The vehicle raised an EUR 80m anchor investment and targeted EUR 300m, according to public filings, although two sources said fundraising ground to a halt after the initial anchor commitment.

In a report for the year to 30 September 2023, the 15-year fund said it expected to achieve a net life return of 8.4%, while it has a net IRR target of 10-12%.

UBS AM also launched in December 2022 a US-focused energy storage fund targeting USD 600m, which had raised USD 210m (EUR 201m) by July 2024, according to SEC filings. The fund is led by UBS executives Mark Saunders and George Manahilov.

One source said the manager weighed plans to launch a new flagship fund last year but is now “focused on asset management to create value for investors”.

UBS AM declined to comment.

Following his exit, Morris’ role has now been filled by New York-based Danny Mills, who was co-head of infrastructure equity for the Americas and has spent 10 years at the asset management arm of the Swiss bank, said the sources. His former co-head Martin Lanternier remains head of infrastructure equity for the Americas.

Mills will report to Dan Dvorak, head of infrastructure, business management and development, who oversees both infrastructure equity and debt arms.

Meanwhile, Thibault Contat Desfontaines, who focuses on investments, and Arpad Cseh, who oversees asset management, have been appointed as co-heads of infrastructure equity for Europe.

The infrastructure equity business has been dogged in the past by poor performance by its first infrastructure fund, AIIF, mostly on the back of its investment in UK utility Southern Water.

Devon County Council, an LP in AIIF, said in its 2023/24 annual report that the value of the fund’s remaining assets fell by 39% last year, leading to a negative 29.9% one-year return, and negative 14.8% over three years.

“The manager is working on selling the assets with three planned for sale during 2024,” said Devon County Council in the accounts. “Southern Water remains a concern, with the likelihood that the valuation will be further impaired by the underlying debts of the company.”

Aside from Southern Water, the fund’s portfolio also includes US power plant operator Northern Star Generation, the 161MW Spinning Spur II wind farm in Texas, and Austrian waste utility Saubermacher, which has been on the market since 2023.

One source said the following two funds are performing better, without providing further details on their returns. East Sussex County Council last June said in filings that AIIF III, which is still drawing down capital, is performing “as expected”, posting a 16.9% return since inception. Filings by California pension fund Calpers in June 2024 however pointed to a negative 1.6% return for AIIF II over the past five years, and negative 12.7% in the past year. Calpers has been a major backer of UBS AM’s infrastructure business, having agreed a USD 500m infrastructure partnership in 2014.

Recent divestments by the equity arm include the sale of Spanish shadow toll concessionaire Autovia del Camino to Abertis for an enterprise value of around EUR 400m-EUR 450m, and the sale of a 4 MW biogas and 14 MW solar portfolio in Italy to Tages.

The debt arm, which is led by Viktor Kozel in London, closed its first high-yield infrastructure debt fund, Archmore Infrastructure Debt Platform – High Yield Credit, last November at around EUR 200m against an EUR 300m target, according to the sources.

It has also launched fundraising for its third senior debt fund, Archmore Infrastructure Debt Platform III, which was registered in 2022. The fund has a target of EUR 2bn, twice as much as its predecessor, and it is yet to reach a first close, the sources said. It is targeting returns in the 5.5%-6% range.

The debt team, which today counts around six members, saw the departure of previous head, Alessandro Merlo, and director Richard Hulme in 2023.

Both infrastructure and equity businesses are part of the real estate and private markets group, which is headed by Joseph Azelby, a JP Morgan and Apollo Global Management veteran who joined the Swiss banking group in 2019.

The bank also has infrastructure fund-of-funds products, which last year were spun out of Azelby’s group and into a new unit called Unified Global Alternatives, linked to the private wealth management arm.