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Overview of Asia-Based Infrastructure Fund Managers

by Ryan Soon

  • 27 Feb 2017
  • INF

Preqin’s Infrastructure Online tracks 48 fund managers based in Asia that have raised an unlisted infrastructure fund in the last decade; together these managers have secured $42bn from 126 distinct fund closures.

Manager Location

India and China have committed significant resource to improving infrastructure in recent times; for example, as part of India’s drive to reduce its dependency on non-renewables, it aims to increase its renewables capacity to 175 GW by 2022. Furthermore, it also aims to boost its commitment to solar and wind energy projects to $20bn annually until 2018/2019. This creates opportunities for private investment and is evident when comparing the populations of Asia-based infrastructure fund managers – firms based in India or China represent nearly half of the active* population.

Key Findings:

  • Despite representing just 13% (6) of Asia-based infrastructure firms, South Korea-based GPs have raised more infrastructure funds (64) in the past 10 years than all other countries on the continent combined.
  • Furthermore, South Korea is home to the two most active firms, with Seoul-based KB Asset Management and KDB Infrastructure Investments Asset Management raising 37 and 23 funds respectively.
  • However, the 16 funds raised by the 12 China-based managers have secured $16bn, $3.9bn more than their South Korea-based counterparts.
  • China Development Bank Capital has raised the most capital in the last decade; its five funds closed since 2007 have secured $6.5bn in capital commitments.
  • India-based firms represent 23% of the Asian infrastructure fund manager population; they have collectively raised 18 vehicles in the past 10 years, but have raised considerably less capital than both South Korea- or China-based firms at $5bn.

Sector Preferences

Energy (56%) and transportation (43%) are among the most sought-after industries by Asia-based fund managers. This is due to the supply gap created by increasing energy consumption and inadequate transportation infrastructure in several developing Asian countries, such as China, India, Myanmar and Indonesia.

Geographic Preferences

Governments in Asia have been ratcheting up their infrastructure investments and PPP projects, which allows fund managers headquartered in the region to take advantage of the location proximity. Home bias is apparent, with 91% of the Asian fund manager population seeking opportunities in the market. Unsurprisingly, China (31%) and India (26%) dominate as the preferred specific investment destinations. The Chinese Government is expected to commit more than $1.5tn over the next five years to infrastructure projects across assets such as railways, toll roads, ports and airports. In addition, China’s One Belt One Road initiative has created investment opportunities that would attract fund managers to seek more exposure within the country.

Outlook

Asia-based fund managers are poised to capitalize on the increased demand for infrastructure in the region, especially in emerging markets that are looking to narrow the disparity between the supply and demand of assets, as well as improving their quality. With Asia Development Bank’s forecast that the continent requires an estimated $8.2tn in infrastructure investments from 2010 to 2020, there is considerable scope for GPs to deepen their presence in the region.

*Raised an unlisted infrastructure fund within the last 10 years. Does not include funds reaching an interim close, separate accounts formed or listed vehicles.

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