A growing number of institutional investors are moving into the infrastructure space due to the potential for a stable and predictable long-term yield, as well as the diversification and inflation hedge characteristics available through a conservatively managed infrastructure portfolio. Preqin is currently tracking over 1,400 active investors in infrastructure, plus an additional 150 investors potentially launching allocations in the near future. These investors are based in over 70 countries around the world and seek exposure through various routes including commitments to both unlisted and listed funds, direct strategies and co-investments alongside fund managers.
The top 100 institutional investors in infrastructure (by committed capital) have already invested over $210bn in aggregate capital in infrastructure opportunities. The average current allocation to infrastructure for these larger and more experienced infrastructure investors is just under 8.5% of total assets under management. The most prominent types of investor in this sample are public pension funds (21%), asset managers (14%), insurance companies (14%) and superannuation schemes (10%).
In terms of route to market, the significant majority (87%) of the top 100 institutional investors in infrastructure seek to make unlisted infrastructure fund commitments. In contrast, 63% of these investors look to bypass expensive fund manager fees by investing directly in infrastructure projects and manage the assets in-house. By doing so, direct investors have more control over their infrastructure portfolios although this only a realistic option for those investors with the resources to employ their own in-house asset management team. Nineteen percent of the top 100 infrastructure investors look to invest in listed vehicles.
Europe is home to 41% of the 100 largest institutional investors in infrastructure, more than any other region. Investors based in North America account for 30% of the total, while those investors located in Asia represent a further 8%. A significant 22% of the world’s largest infrastructure investors are based outside of these core regions, of which 17% are based in Australasia, and 2% are located in both South America and South Africa.
In terms of aggregate committed capital by country, Canada is the most prominent single country in the sample with 14% of the top 100 institutional investors in infrastructure based within the country accounting for 24% of the total capital invested by these investors to date ($49.8bn). Other significant countries include Australia (16% of investors and $27.9bn in total investments), the US (16% of investors and $21.8bn in total investments) and the Netherlands (6% of investors and $18.4bn in total investments).
The largest institutional investor currently active in the infrastructure asset class is OMERS, the Canadian public pension fund. OMERS has been an active investor in infrastructure since 1998 and currently has over $15bn invested in infrastructure opportunities. The public pension plan only makes direct investments in infrastructure projects and has exposure to a diverse range of industries including transportation, energy and social infrastructure. Other notable investors include CPP Investment Board. APG- All Pensions Group and AustralianSuper.