Infrastructure dry powder continues to grow across unlisted infrastructure funds and now stands at $115bn, $3bn more than the level of dry powder recorded at the end of 2014. Preqin’s Infrastructure Online service shows that geographically, North America-focused funds continue to account for approximately half of the dry powder total, with the region’s total rising by $3bn since December 2014.
Europe-focused funds have seen a reduction in dry powder since 2014, falling $1bn to $34bn as of August 2015. In the same period, funds focused outside North America, Europe and Asia saw total unlisted infrastructure dry powder levels increase by $1bn. A different picture has emerged for Asia-focused funds: dry powder levels have stagnated for the first time since December 2003, when Preqin started tracking dry powder by region.
The chart above shows the proportion of total infrastructure dry powder at year end by fund size*; unsurprisingly, mega funds account for the largest proportion of the total (42%). However, the proportion of dry powder from mega funds has reduced considerably from 57% in December 2007 to 42% in August 2015, while mid- to large-sized funds have seen their proportion of dry powder levels increase from 29% to 47%. Additionally, the seven percentage point increase in the proportion of dry powder represented by large funds since December 2014 correlates with the increase in aggregate capital raised by large infrastructure funds: $8bn in commitments were secured as of August 2015, compared to $5bn as of December 2014.
More capital available to invest in the asset class should be driving the number of completed deals, but as mentioned in the feature article of the August issue of Infrastructure Spotlight, concerns over rising valuations from both fund managers and institutional investors and increased competition may impede deal flow and lead to dry powder levels rising further.
*Fund size ranges as defined by Preqin: Small ≤ $500mn, Mid $501-999mn, Large $1-1.9bn, Mega > $2bn.