The unlisted infrastructure debt fund market, which includes funds that provide mezzanine financing, has historically been a small and fairly niche sector within the asset class. The completion of infrastructure projects traditionally requires a significant proportion of debt, which was limited by the contraction of the credit markets during the financial crisis. This has extended into 2010, with annual deal volume considerably down on previous years. Consequently, more unlisted infrastructure fund managers have begun raising debt funds in order to compensate for the shortfall in supply and to capitalize on the increasing demand for debt financing.
Preqin is currently tracking 30 infrastructure debt funds, 27 of which are traditional closed-end vehicles, one of which is open-ended, one is an evergreen fund and one is a listed vehicle. 14 of the closed-ended funds have reached a final close raising an aggregate $5.5bn. The remaining 13 funds are currently raising capital seeking a further $6.5bn. These debt funds account for 11% of all funds currently on the road and 8% of the total capital being sought by infrastructure fund managers worldwide.
There are seven vintage 2006 funds, the most of any vintage to date. Three funds are confirmed as vintage 2010, including FINTRA managed by Darby Overseas Investments. FINTRA held a $150mn first close in August 2010 and will provide both debt and equity financing to a range of transportation and energy projects in Colombia. It plans to raise $300mn in total capital commitments.
This blog is an excerpt from this month’s Infrastructure Spotlight feature article. To view the whole article, please click here. For more information on unlisted infrastructure fundraising as a whole, please see how Preqin’s Infrastructure Online can assist you.