In recent years the unlisted infrastructure industry has matured into an independent asset class resulting in a growing number of deals involving unlisted infrastructure funds. Private funds have been in an important source of equity for infrastructure projects since the early 1990s, and will continue to be in the future as companies and governments seek alternative sources of capital to overcome the widening infrastructure deficit.
At the end of October 2009, Global Infrastructure Partners, a USD 5.6 billion unlisted infrastructure fund, purchased London’s Gatwick Airport for GBP 1.5 billion from BAA. This sizeable transaction, as well as others including a EUR 650 million investment in Eurotunnel by GS Infrastructure Partners I in September, provide evidence that infrastructure funds can still complete large transactions, even with the limited availability of debt finance, and will continue to offer valuable financial support to the sector for the foreseeable future.
However, despite these encouraging signs, the number of deals conducted by unlisted infrastructure funds in 2009 is down from previous years as a result of the financial crisis. In 2006, 131 deals involving an unlisted infrastructure fund were made, followed by 138 in 2007 and 151 in 2008. However in 2009, year to date, just 82 infrastructure deals have been reported. However, this is likely to increase over the next 12 months as the markets continue to recover and the impact of the government initiatives is felt.
One such initiative is the Infrastructure Planning Commission (IPC), set up in the UK, to promote and fast track private investment in the country’s infrastructure sector. Additional stimulus plans are being formulated all over the world to encourage infrastructure development as the world attempts to recover from the market downturn, but it seems apparent that unlisted infrastructure funds are likely to play an integral part in the recovery.
For more information on infrastructure funds and fundraising, please click here to learn more about our Infrastructure Online service and the 2009 Preqin Infrastructure Review.