2013 saw the highest level of capital raised by unlisted infrastructure funds since 2008, with 47 funds reaching a final close, raising an aggregate $38bn. This represents 31% more capital than was raised by infrastructure funds that closed in 2012 and 58% more than was achieved in 2011. Additionally, a further $11bn was raised by infrastructure funds holding an interim close in 2013.
The average size of infrastructure funds also increased significantly in 2013, with funds closed over the year averaging a final size of $872mn, considerably higher than the $647mn average in 2012. While the large closes of the $7bn Brookfield Infrastructure Fund II, and the $6bn EIG Energy Fund XVI pushed up this average, even when excluding these funds, the average fund size for 2013 is still $604mn. This is above the average for all funds closed in 2011 and 2012.
Another positive sign for the infrastructure industry is the number of funds which have either met or exceeded their target sizes. Fifty-three percent of funds closed in 2013 closed on or above their targets, compared with 39% of funds that achieved the same in 2012. Furthermore, almost a quarter of funds that closed in 2013 reached 120% or more of their initial fundraising target.
Although there have been many encouraging signs for the infrastructure fundraising market in 2013, there is still a growing concern that the capital being raised is increasingly concentrated among a few of the largest players in the industry. The combined $13bn raised by Brookfield Infrastructure Fund II and EIG Energy Fund XVI accounted for 34% of the total capital raised over the year. Additionally, Preqin’s data suggests that fundraising for infrastructure vehicles is still a long process for most firms. The average length of time spent in market for funds closed in 2013 was 22 months which, although less than the 23 month average for funds closed in 2012, still indicates challenging conditions for many firms.