Historically, institutions making direct infrastructure investments have comprised of firms whose primary business is in the infrastructure sector, such as construction firms and energy companies. However, as the asset class has matured and investors have gained more experience in the sector, institutions that first begun investing via unlisted infrastructure funds only, such as pension funds and insurance companies, have increasingly begun to seek out direct investment opportunities in order to avoid the costly fees associated with funds and to exert greater control over their investment portfolios.
Preqin has compiled a list of the 30 most active institutional investors making direct infrastructure investments, via our Infrastructure Online service, and taken a look at the deal flow by these investors since 2007. The investors which feature in this sample are not involved in the infrastructure sector as part of their primary business activities, but include the more traditional institutional investor types such as pension funds, insurance companies and sovereign wealth funds.
The number of deals made by the 30 most active institutional investors unsurprisingly decreased between 2007 and 2009, from 136 to 91. However, since 2009, deal flow has been steadily increasing year-on-year, reaching a peak of 154 in 2013. Looking at a breakdown of deals made by these investors by industry, the most prominent is the utilities sector, encompassing 30% of all deals completed in the period. The energy sector made up 20%, and renewable energy accounted for a further 19%. Sixteen percent of the direct deals completed by these investors were in the social infrastructure sector, including schools, hospitals, prisons and judicial buildings, and 12% were in the transport sector.
In terms of region, Europe is the most prominent market for deals made by the most active institutional investors during the period, accounting for 36% of the total. Thirty percent of deals completed were in North America, 20% in Asia, and 14% were located in areas outside of these core regions.
Notable deals made by the top 30 institutional investors include the $2bn acquisition of the Denver Light Rail PPP project in the US by Macquarie Bank, Balfour Beatty Capital and Fluor Corporation in February 2013. In December 2013, OMERS, Colonial First State Global Asset Management/First State Investments, Elo Mutual Pension Insurance Company and Keva acquired the Finnish Power Distribution Grid for €2.5bn, and in January 2013, Ontario Teachers’ Pension Plan acquired SeaCube Container Leasing (a shipping container leasing company based in the US) for $1.8bn.