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Infrastructure in 2010: Fundraising and Deals

by Elliot Bradbrook

  • 13 Jan 2011
  • INF

In 2010, 25 unlisted infrastructure funds closed raising an aggregate $27.3bn.  This represents a dramatic 354% increase from the $7.7bn raised in 2009 and is not far short of the $34.9bn raised in 2008.  The average fund size in 2010 was $1.1bn, higher than in both 2009 and 2008.  Despite a slow Q4, during which just four infrastructure funds closed raising a collective $1.4bn, the positive fundraising figures suggest recovery is well under way.  This looks set to continue with a record number of funds on the road and a return of investor confidence.

The largest fund to close in 2010 was Energy Capital Partners II, managed by US-based Energy Capital Partners, which closed on $4.3bn.  Other notable closes included Alinda Infrastructure Fund II, which raised $4.1bn, and GS Infrastructure Partners II, which raised $3.1bn. 

Although fundraising levels improved, infrastructure deal flow remained restricted by the ongoing effects of the global financial crisis.  The lack of available and affordable long-term debt financing and high asset valuations meant the number of deals completed by unlisted infrastructure fund managers in 2010 was 14% lower than in 2009.  Future deal volume will depend on an increased availability of long-term debt, increased equity-to-debt ratios and more realistic asset valuations.  Fund managers will therefore need to be creative in order to identify and execute profitable transactions.

There are currently a record 122 unlisted infrastructure funds actively raising capital, targeting $85.8bn in investor commitments.  This represents an increase from the number of funds that were in market in January 2010 but a drop in the aggregate target capital sought.  This can be attributed to the market saturation caused by the global financial crisis forcing fund managers to set more realistic fundraising targets.

For more information on infrastructure fundraising and deal flow, please click here to learn more about the Preqin Infrastructure Online service.

 

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