The Prominence of Core Infrastructure – May 2013

by Stephen Yates

  • 28 May 2013
  • INF

Core sectors have long been a staple area within the infrastructure asset class for fund managers and investors. Core infrastructure, including energy, telecommunications, transport and utilities, typically displays the strongest characteristics of the asset class, such as high barriers to entry and natural monopolies. Due to these assets having historically been the mainstay for fund managers, many have acquired valuable experience in this area, which enables them to execute deals efficiently and effectively.

Core infrastructure accounts for 64% of the 92 investments made within the infrastructure asset class in 2012. Similarly, in 2011 and 2012, core infrastructure industries accounted for 86% and 73% of infrastructure deals respectively. It is unlikely that we will see a shift away from the prominence of core infrastructure in the near future, given the established nature of core assets within the asset class. With its continued prominence, demonstrable fund performance is available in these industries, making them a key preference for some investors. In fact, of the 164 unlisted infrastructure funds currently in market, 117 of these invest within core infrastructure sectors. In terms of investor appetite, of the 2,003 active investors tracked by Preqin Infrastructure Online, 65% specifically target core infrastructure industries, highlighting the prominence of core infrastructure as an established area of investment. Alinda Global Core Infrastructure Fund is an example of a core infrastructure fund; it invests in core sectors including energy and utilities throughout the US and globally. The fund is currently in market and is seeking $3bn in investor commitments.

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