Historically, infrastructure funds focused on emerging markets have not attracted the same level of commitments as funds focused on developed markets. The absence of developed infrastructure and the relative inexperience of fund managers in these regions cause the risk profiles of these funds to increase dramatically. Therefore investors have tended to favour funds focused on the more stable and predictable markets of Europe and North America.
In 2008, of the 38 infrastructure funds to close, 10 vehicles focused on Asia and Rest of World raising $3.2bn. In the same year 19 European funds and nine North American funds closed, raising $11.8bn and $19.6 respectively. However, in 2009 funds focused on emerging markets outperformed those targeting European and North American opportunities. Of the 11 funds to close in 2009, eight focused on emerging markets raising $3.4bn. In contrast, just two European funds and one North American fund closed, raising a combined $2.9bn.
There are currently more funds on the road targeting emerging market opportunities than both Europe and North America, with 57 funds targeting $28.9bn. This represents 48% of the total fundraising market and illustrates the growing importance of emerging market opportunities. An increasing number of fund managers are looking outside of traditional markets in search of profitable assets, particularly in the current market environment, where high-yielding assets are scarce in developed market economies.
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