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The Infrastructure Fund of Funds Market

by Emma Davis

  • 10 Jul 2012
  • INF

The infrastructure fund of funds market remains a small niche area of the unlisted infrastructure space. Twenty-two infrastructure fund of funds managers currently make up 7% of the over 300 infrastructure fund managers active in the market. Of these 22 fund of funds managers, 13 are infrastructure-specific and nine are focused more broadly on real assets. The infrastructure-specific managers have closed 11 fund of funds vehicles, raising an aggregate $2.6bn, which amounts to 1.25% of the overall aggregate capital raised by all infrastructure funds to date. In addition, there are eight infrastructure-specific fund of funds currently in market seeking a further $2bn.

In terms of geographical location of infrastructure fund of funds managers, the majority are situated in Europe, with European managers representing 85% of the overall universe. Twenty-one percent of infrastructure fund of funds managers are located in Germany, the UK and Switzerland respectively, followed by France (15%) and Luxembourg (7%). The remaining 15% are based in North America.

The majority of infrastructure fund of funds managers target global investments, with 79% pursuing a multi-continental strategy.  North America is the most preferred market for these firms, with 57% targeting North American funds compared to the 43% that will invest in European opportunities. Thirty-five percent of infrastructure fund of funds managers are considering exposure to Asia and Rest of World vehicles, showing that investment in emerging markets is growing in significance. Additionally, 29% of infrastructure fund of funds managers seek investment in a diversified mix of emerging and developing economies.

The largest infrastructure fund of funds vehicle currently on the road – Pantheon Global Infrastructure Fund II, managed by Pantheon – will target global investments in a diverse range of industries and project stages. The vehicle is targeting €350mn in investor commitments and has not yet held a first close. Pantheon is based in the UK and previously raised $357mn through its first infrastructure fund of funds vehicle, Pantheon Global Infrastructure Fund I, which closed in December 2010.

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