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.
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