The dry powder of these funds increased from $11bn in December 2004 to $101bn in September 2014 – approximately 10 times the uncalled capital of a decade ago. This has been concurrent with an even greater surge in unrealized value.
In December 2004, the unrealized value of unlisted infrastructure funds stood at $6bn, compared with $192bn in September 2014. In fact, the total unrealized value of unlisted infrastructure funds has risen every year since 2004, including in the period 2007 to 2008, which saw the total unrealized value of private equity funds fall by almost 5%. The majority of the increase in unrealized value over the last decade is attributable to the period 2010 to 2014, which accounted for 70% of the $186bn increase. Incidentally, 2010 is also the first year in which unrealized value exceeded the dry powder of unlisted infrastructure funds (which has been maintained ever since).
The realization of these investments is key for infrastructure investors. As a fairly young asset class, distributions were low between 2004 and 2009 – consistently below $6bn – as managers sought to build their portfolios. In 2009, this figure rose to $9bn and has continued to increase since. Distributions in 2013 reached a record $25bn, further demonstrating that fund managers are beginning to exit investments. Over the course of the next decade it will be interesting to see how managers fare with infrastructure exits and whether investors will seek to increase their holdings in the asset class.