Over the course of the last decade the uncalled capital commitments (dry powder) of unlisted infrastructure funds has increased significantly, as the asset class has grown in prominence and more investors have targeted infrastructure funds. Dry powder of infrastructure funds was valued at just $4bn in December 2003, however this increased steadily to $38bn in December 2006, and grew by almost three quarters in 2007 to $66bn. Since this time, infrastructure dry powder levels have increased considerably, standing at a record level of $102bn in July 2014.
The majority of dry powder for unlisted infrastructure funds was accounted for by mega funds (those sized at $2bn or more) from December 2007 (59%) to December 2009 (52%). However, since this point the proportion of total dry powder represented by mega funds has decreased, with the proportion for small and medium funds correspondingly increasing. Since December 2010, small, medium and large funds have accounted for a greater proportion of dry powder than their mega fund counterparts. In June 2014, small funds (valued at less than $0.5bn) accounted for 17% of the dry powder, medium funds ($0.5bn to $999mn) held 16% and large funds ($1bn to $1.9bn) represented 22% of total dry powder, together accounting for 55% of aggregate dry powder, compared to 45% for mega funds. This is compared to 59% for mega funds, 22% for large funds, 7% for medium funds and 12% for small funds in 2007.
Given the increasing dry powder and unrealized values of unlisted infrastructure funds, as well as the continued gap between required and public spending in the asset class, it will be interesting to see over the next few years whether small and medium funds continue to increase in prominence in terms of dry powder, and whether the success of funds will encourage more mega and large funds to launch into the space.