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Infrastructure Funds on the Road

by Elliot Bradbrook

  • 02 Nov 2010
  • INF

There are currently 109 unlisted infrastructure funds on the road targeting an aggregate $76.3bn. In terms of target capital, this is significantly lower than the $107.8bn being sought by 107 funds in market in Q3 2009 and is also considerably down on the $88.8bn being sought by 100 funds in market in Q1 2010. This is partly due to the closure of several sizeable funds in 2010 so far, but also because fund managers are lowering their targets. There are still 17 infrastructure funds in market targeting $1bn or more and these funds account for 64% of the total capital sought by infrastructure funds currently in market.  Four are targeting at least $2bn, but only three funds, including RREEF Pan- European Infrastructure Fund II, are currently targeting over $3bn.

Infrastructure investors are likely to be more selective when making fund commitments in the future. Therefore manager experience is becoming more important, although the majority of funds in market are managed by first-time fund managers.  55% of funds on the road are first-time funds, with only 19% managed by firms that have raised at least five previous infrastructure vehicles. Although the majority of first-time infrastructure funds in market are being raised by first-time fund managers, a number of funds are being raised by firms with experience in other areas such as private equity. For example, three of the largest ten funds in market are first-time infrastructure vehicles being raised by experienced private equity firms: Blackstone Group, CVC Capital Partners and KKR.

More funds in market are focused on Asia and Rest of World than on either Europe or North America. 46 funds are focused outside of the developed European and North America markets, showing the growing importance of emerging market opportunities. However, in terms of target capital, Europe- and North America-focused funds are more significant, targeting $28.5bn and $25.6bn respectively.

The majority of funds on the road target a diverse portfolio of infrastructure assets and will consider a range of project stages. 64% of funds currently raising capital will consider investing in assets in various stages of development. 69% will invest in greenfield projects, 72% will consider brownfield assets and 42% of funds will target more established secondary stage opportunities.

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