Nine unlisted infrastructure funds have closed in 2010 to date raising $11.7 billion, which already surpasses the total capital raised in 2009 ($7bn). This figure includes the $4.1 billion Alinda Infrastructure Fund II, and the $3.1 billion GS Infrastructure Partners II, which closed this week. This is a marked improvement on the $1.7 billion raised in Q4 2009 and exceeds the total capital raised last year.
The first four months of 2010 suggest that infrastructure fundraising for the year will be much stronger than 2009. But although investor confidence is gradually returning, fundraising conditions for fund managers will remain tough as investors exercise heightened caution before making fund commitments. The number and aggregate target of funds in market reached a peak at the start of Q4 2009, with a record-breaking 104 funds on the road targeting $106.8 billion in investor commitments. Since then, the fundraising market has steadily declined, with fund managers reducing fundraising targets or in some cases abandoning funds altogether. At present there are 100 funds seeking an aggregate total of $82.5 billion.
Many investors have indicated to Preqin that they will be more active in 2010 than they were in 2009, and the flow of commitments by investors should continue to increase over the coming quarters. However, there are a number of issues that investors are highlighting which must be addressed by fund managers seeking new commitments, including improving the relationship between investors and fund managers through better communication and greater transparency, a suitable fund management fee framework, and also a fund structure that aligns with the specific nature of the infrastructure investments targeted by a fund.
For more information on infrastructure funds and fundraising, please see Infrastructure Services