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Asset Managers Investing in Infrastructure – October 2012

by Stephen Yates

  • 30 Oct 2012
  • INF

A significant majority (80%) of asset managers actively investing in the infrastructure asset class look to make commitments to unlisted vehicles, while 54% make direct investments and 17% target listed infrastructure funds. Although interest in direct investments continues to grow, unlisted vehicles will remain the primary route to market for asset managers in the future.

These institutions source capital for infrastructure investment from a number of different areas. Less experienced asset managers are more likely to invest in the infrastructure 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. Fifty-one percent of active asset managers investing in infrastructure maintain a separate infrastructure allocation, while 18% invest via a private equity allocation, 12% via general alternatives, 7% via real assets, and a further 3% through an opportunistic investment portfolio.

In terms of target allocation to infrastructure, 57% of asset managers that invest in infrastructure maintain a target allocation of between 1% and 4.9% of total assets under management. Seventeen percent of asset managers have a target of 5-9.9% of total assets under management, while 10% maintain a 10-49.9% target allocation, and 6% plan to invest more than 50% of assets under management in the asset class.

In terms of regional focus, Europe is the predominant region for asset managers investing in infrastructure. A significant 55% of asset managers active in the infrastructure market favour investment in Europe, whilst 21% will consider investment in North America. A further 6% of asset managers invest in Asian infrastructure, while 18% 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 almost €9bn to the infrastructure asset class, representing around 3% of total assets under management. APG has already invested almost €6bn 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 over the coming 12 months.

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