Comparing US- and Canada-Based Investors in Infrastructure – September 2014

by Justin Hall

  • 26 Sep 2014
  • INF

Preqin’s Infrastructure Online service currently tracks 885 US- and Canada-based LPs which invest in the infrastructure asset class, 86% of which are located in the US and 14% in Canada. The US-based investors have aggregate assets under management of more than $15tn, while the Canada-based investors have over $3tn in assets under management.

On average, Canada-based investors have a higher current allocation to infrastructure, at 6% of total assets, below their target of 10%. US-based investors investing in infrastructure currently allocate just 2% of total assets to the asset class, below their target of 5%. A considerable 67% of Canada-based investors have established separate infrastructure allocations, with 33% investing through other means such as their real assets, private equity, or general alternatives allocation. In the US, 78% allocate capital through their real assets, private equity or general alternatives allocation, while just 15% have a separate infrastructure allocation. With Canada-based investors allocating a greater proportion of their assets to the asset class, and many doing so through separate infrastructure buckets, it is possible to see the importance placed on investing in infrastructure by these investors.

Routes to market are another aspect in which these investors differ. Unlisted infrastructure funds are favoured by the majority of North America-based investors, with 73% of US-based investors only investing in these funds, compared to 50% of Canada-based institutions. Eleven percent of Canada-based investors only invest in direct infrastructure, while just 2% of US-based investors make this a priority. The remaining investors allocate capital to a combination of unlisted, listed and direct infrastructure.

For both countries, private and public pension funds make up the majority of firm types, representing 57% of Canada- and 38% of US-based investors. Foundations (18%) and endowments (17%) make up the next most common firm type for US-based investors. Canada-based investors are composed of a wide range of firms, which include asset managers (8%), insurance companies (7%), endowments (7%) and various other firm types.

In conclusion, Canada-based investors, while making up a significantly smaller part of the infrastructure investor universe, allocate more capital to the asset class on average. Canada-based investors are also more likely to have a separate allocation to infrastructure and to maintain a higher target to the asset class. For instance, Saskatchewan Healthcare Employees’ Pension Plan, a CAD 5.1bn pension plan with a target allocation of 8%, is planning to add a new unlisted fund commitment through a new manager in order to reach its target allocation. A much larger US-based firm, CalPERS, which has $300bn in total assets, has a target allocation of 2% to infrastructure, and is looking to commit $2bn across unlisted and direct infrastructure in the coming 12 months. 

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