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Asset Managers Investing in Infrastructure – April 2014

by Stephen Yates

  • 01 Apr 2014
  • INF

A significant majority (76%) of asset managers actively investing in the infrastructure asset class look to make commitments to unlisted vehicles, while 44% make direct investments and 23% target listed infrastructure funds. Although interest in direct and listed infrastructure continues to grow, unlisted vehicles are likely to remain the primary route to market for asset managers moving forward.

These institutions source capital for infrastructure investment from a number of different areas. Less experienced asset managers are more likely to invest in the asset class via general alternatives, private equity, opportunistic and/or real assets allocations, while the more experienced institutions prefer to create separate infrastructure-specific allocations. In fact, 55% of active asset managers investing in infrastructure maintain a separate infrastructure allocation, while 16% invest via a private equity allocation, 12% via a general alternatives allocation, 12% via a real assets allocation and as little as 4% invest through an opportunistic investment bucket.

In terms of target allocation to infrastructure, 50% of asset managers maintain a target allocation of between 1% and 4.9% of total assets under management. Twenty-five percent of asset managers have a target of 5-9.9%, while 10% maintain a 10-49.9% target allocation and 5% plan to invest more than 50% of assets under management within infrastructure.

In terms of regional focus, Europe continues to be the most dominant region for asset managers investing in infrastructure. A significant 43% of asset managers active in the infrastructure market favour investment in Europe, while 26% prefer investment opportunities within North America. A further 11% of asset managers consider Asian infrastructure as their primary regional focus, while 20% will invest outside of these three core regions in areas such as South America, Australasia and the Middle East. Many asset managers pursue a multi-continental investment policy in order to increase the diversification of assets held within their portfolio.

A prominent asset manager active in the private infrastructure market is APG – All Pensions Group. The Dutch asset manager maintains a target allocation of over €10bn to the infrastructure asset class, representing 3% of total assets under management. APG has already invested almost €7bn in infrastructure opportunities, including a mix of unlisted fund commitments and direct investments, and in a diverse range of industries and project stages. It will continue to invest in the infrastructure asset class on an opportunistic basis, in the coming 12 months.

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