A Decade of Asia-Focused Infrastructure Fundraising – April 2016

by Ryan Soon

  • 14 Apr 2016
  • INF

Preqin’s Infrastructure Online contains detailed information on 108 Asia-focused unlisted infrastructure funds that have reached a final close since 2006, accumulating $39bn in institutional capital commitments. 2016 has seen the largest Asia-focused vehicle to reach a final close during this period; Macquarie Asia Infrastructure Fund secured $3.1bn for pan-Asian investments in core infrastructure assets in February.

Fundraising in Asia has fluctuated over time, peaking in 2013 when 18 funds closed with an aggregate $6.3bn; this was bolstered by the closures of KIAMCO Power Energy Private Fund Special Asset Trust 3 and Urban Construction Fund, which secured $2.2bn and $1.6bn respectively. These figures represent over half of the fundraising total and reversed two consecutive years of declining fundraising. Although fewer funds have closed annually since 2013, the aggregate capital raised in 2015 ($5.7bn) almost surpassed the record high secured in 2013 ($6.3bn), while the first quarter of 2016 has already seen half of the total capital that was raised in the whole of 2013.

The vast majority (90%) of Asia-focused funds that have closed in the past decade employ a primary strategy, while 39% of vehicles utilize debt or mezzanine investments as part of their approach. Seventy-eight percent of funds closed target assets at the greenfield stage, while 58% and 40% of funds invest in brownfield and secondary stage projects, respectively.

The majority of Asia-focused infrastructure funds to reach a final close in the past decade have been managed by firms based in Asia, while Europe- and US-based managers are responsible for 10% and 9% of funds closed, respectively. Seventy-six percent of fund managers that target investments in Asia have closed only one fund since 2005, reflecting the relative youth of the Asian infrastructure market.

There are 16 unlisted infrastructure Asia-focused funds currently raising capital, including five funds that will target India-based assets exclusively. Due to economic expansion and the increasing infrastructure demand across Asia, the asset class looks set to grow in this region. Privatization of assets in Asia has also created further opportunities, with fund managers likely to continue viewing Asian infrastructure as an important component in their portfolios.

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