The Central and South American Infrastructure Market

by Paul Bishop

  • 31 Jan 2012
  • INF

Preqin is currently tracking 50 funds targeting infrastructure investment opportunities within the Central and South American markets, of which 46 are traditional unlisted closed-end vehicles.  Thirty of these funds have already reached a final close, raising an aggregate $17.3 billion.  In terms of manager location, 29% of these funds are managed by firms based in the US, closely followed by managers located in Brazil (24%).  Other prominent manager bases include Canada, Australia and the UK.

There are currently 16 unlisted infrastructure funds on the road focused on the Central and South American infrastructure markets, targeting an aggregate $8.1 billion in investor commitments.  This equates to 11% of the total number of infrastructure funds currently in market and 9% of the total capital being sought worldwide.  All of these vehicles target investments in economic infrastructure sectors, highlighting the growing demand for the development of core infrastructure assets in this region.  The energy sector is the most prominent industry targeted by infrastructure funds with a Central and South America focus, with 53% investing in energy, renewable energy and clean-tech opportunities.

In terms of deal flow, 40 deals have been made by unlisted infrastructure fund managers in assets located in South America since 2006.  This represents just 3% of the total number of deals completed by infrastructure firms during this period globally, although the number of South American deals being made is likely to grow in future due to increased demand for private sector investment in the region.  Seven deals were made in South American infrastructure assets in 2011.

Preqin is currently tracking 115 institutional investors with a preference for investment in Central and South America.  A significant 39% of these investors are based within the region, while North American and European investors make up 30% and 20% of the total respectively.  Asia and Rest of World-based investors account for the remaining 11% of investors with a preference for investment in Central and South America. Of the 115 investors, 43% are public and/or private sector pension schemes, followed by government agencies which represent 13% of the total.  This is indicative of the make-up of the global infrastructure investor universe, with pension plans being the most prominent type of investor in the asset class worldwide. 

Eighty-eight percent of investors with a preference for Central and South American assets look to gain this exposure through commitments to unlisted infrastructure funds, with 92% preferring to invest in funds making just equity investments, while 26% will consider debt strategies.

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