With the recent announcement of Ingenious Capital Management’s plans for a£160mn IPO of its Clean Energy Income fund, we take a look at the current listed infrastructure fund universe and assess whether there is a growing trend for investors looking to access the asset class via such vehicles. Preqin defines a listed infrastructure fund as a vehicle that is publicly traded on a stock exchange, which acquires the private ownership of infrastructure assets or infrastructure-related companies.
Preqin is currently tracking 41 listed infrastructure vehicles, representing just 6% of the entire infrastructure fund universe. Over the past year however, we have seen a number of listed infrastructure funds come to market, particularly in the UK. 2013 saw the IPO of four UK-based funds, all focused on renewable energy projects, raising an aggregate £840mn. Greencoat UK Wind raised £260mn in March, followed by Bluefield Solar Income Fund and Renewables Infrastructure Group in July, raising £130mn and £300mn respectively. Foresight UK Solar Fund’s October IPO raised £150mn.
Listed infrastructure funds offer investors a more liquid way of gaining exposure to private infrastructure investments, compared with unlisted funds. As such, this route to market can be attractive to those investors with liquidity concerns. Additionally, certain listed infrastructure funds can offer low management fees and operating expenses. Ingenious’ fund aims to attract investors that are seeking dividends that beat returns on government bonds, as the Bank of England keeps interest rates at record lows.
Preqin data shows that there are 223 investors active in the infrastructure space that will consider investments in listed infrastructure funds. While representing only around 10% of the entire investor universe, this number is still substantial and shows that there could be demand for more listed infrastructure vehicles to come to market. Notable listed infrastructure funds include HICL Infrastructure Company, which launched in 2006 and was the first such vehicle to be listed on the London Stock Exchange, and Brookfield Infrastructure Partners, which launched in 2007. Bilfinger Berger listed its Global Infrastructure fund in 2011. In terms of deals made by listed infrastructure funds, this month HICL acquired stakes in three UK social infrastructure assets, including Derby Schools, Glan Usk Primary School and Medway Police. HICL has to date made 141 investments, the majority of these in UK social infrastructure. A notable deal involving a listed infrastructure fund was the acquisition of a 45.45% stake in the Vespucio Norte Toll Road in Chile by Brookfield Infrastructure Partners in July 2012. The total deal size was $590mn, with Brookfield investing $290mn in equity. This added to the 46.3% stake in the asset which Brookfield had acquired via its unlisted Americas Infrastructure Fund in October 2011.