Infrastructure Dry Powder and the Bottleneck

by Richard Stus

  • 07 Jul 2009
  • INF

The amount of dry powder across the unlisted infrastructure fund market has grown consistently since 2003, and currently there is a record $71.5 billion available for unlisted fund managers to invest in infrastructure assets. The growth in dry powder over recent years reflects unlisted infrastructure’s transition from a niche sector within private equity into a separate asset class in its own right.

The geographic breakdown of dry powder infrastructure managers currently have to hand shows US infrastructure is in line to receive $34.3 billion, almost 48% of the capital available globally, from investments made by 30 fund managers. This is followed by European focused dry powder totalling $21.3 billion from 48 managers and Asia and Rest of World totalling $15.9 billion from 47 managers.

The current record-breaking infrastructure dry powder figure is due to a bottle neck in the deal flow. There has been increasing competition for infrastructure assets between fund managers, as reflected by the number of funds currently in market, and this competition has contributed to the overpricing of infrastructure assets and forced fund managers to stockpile their dry powder until more realistic asset prices are presented in the marketplace.

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