Infrastructure Snapshot: Latin America – May 2013

by Paul Bishop

  • 14 May 2013
  • INF

Preqin’s Infrastructure Online service is currently tracking 30 unlisted infrastructure funds managed by firms based in Latin America, which consists of Central America, South America and the Caribbean. Of these 30 funds, 20 have already reached a final close, raising an aggregate $4.8bn in investor capital. There are currently 10 unlisted infrastructure funds managed by firms in Latin America on the road, seeking a combined target of $5bn. Brazil is the most active region within Latin America, with 67% of all Latin America-focused vehicles managed by firms based in this country. Chile and Mexico are joint-second in terms of activity, with 10% of funds managed by firms in these countries respectively. Colombia is the third most active country within the region, with 7% of funds managed by Colombia-based firms.

Of the funds managed by firms based in Latin America, all except two invest within Latin America, with the exceptions being active within Asia and Africa. Seventy percent of funds managed by Latin America-based firms will consider investing in Brazil, pointing to the importance of the country within the region. As a major emerging economy, Brazil represents significant opportunities for infrastructure investors to develop greenfield and brownfield projects to stimulate economic and social development. In addition, many in the industry have commented that the upcoming Olympics in 2016 and Football World Cup in 2014 are further stimulating infrastructure investment in Brazil. Transportation is the industry most targeted by funds based in the region, with 63% including this within their investment strategy. Similarly, energy and renewable energy are particularly active industries in the region, with 43% and 33% of funds respectively including these assets in their investment criteria. Core economic infrastructure is targeted by 93% of the funds based in the region.

In terms of investors, 3% of the active investor universe is located in Latin America. Brazil is the most active country within the region, acting as home to 40% of all Latin America-based investors.  Mexico is the second most active region for investors in Latin America, with 22% of all investors in the region based there. Other active countries within Latin America for investors include Colombia, Peru and Chile, with 13%, 11% and 9% of Latin America-based investors located in these countries respectively. In terms of the wider investor universe, 8% of the total investor universe is open to investments in Latin America. Of these global investors, US investors are by far the most open to investing, with 22% of those open to Latin America investments based in the US.

There have been 70 deals made by unlisted fund managers in Latin America-based infrastructure assets since 1995, 55% of which have been made in Brazilian infrastructure assets. Twenty percent of the total deal flow is accounted for by Chilean assets, and 16% of deals since 1995 were in Peruvian infrastructure assets. In terms of asset type, transportation asset deals are the most active within historical deal flow, with 39% of the total number of deals made in the transportation sector. Energy is also a highly active industry in the Latin America, with 26% of the total number of deals historically made in these assets.

Continue browsing industry reports, publications, conferences, blogs and more on Preqin Insights