The infrastructure market in the Asia-Pacific region is evolving from one dominated by Australia as a forerunner in privatizing domestic infrastructure to that which is seeing increasing participation by other countries such as China and India. China’s proposal to establish an Asian infrastructure investment bank to finance projects, with capital to come from governments and private institutions, has already secured Singapore’s participation. Earlier this month, India’s capital markets regulator announced that it will now approve the creation of infrastructure investment trusts. Asian Development Bank estimates that Asia will see an infrastructure funding gap of at least $8tn between 2010 and 2020, which explains the uptick in government-led initiatives within the region to boost private capital participation in the infrastructure market. With these measures coming into view, which are the top 100 Asia-Pacific-based institutions best placed to partake in future investment opportunities?
At present, Preqin’s Infrastructure Online service tracks 404 institutional investors that are located in Asia-Pacific with an interest in infrastructure; these firms make up 18% of the worldwide investor pool. Collectively, they manage more than $27tn in total assets, of which a substantial 80% belongs to the top 100 firms. The top 100 institutions in Asia-Pacific by assets under management have an exposure of at least $65bn to the infrastructure asset class. A noteworthy 88% of the top 100 Asia-Pacific investor pool gains access to infrastructure via private vehicles. Sixty-two percent of these 100 institutional investors have exposure through direct investments, while 24% invest via listed funds.
Japanese firms form the largest (30%) proportion of the top 100 infrastructure investors in Asia-Pacific, while institutions from South Korea (20%), Australia (13%), China (11%) and India (10%) make up the remaining four most common locations where the investor pool is headquartered. A prominent Japan-based institution in infrastructure is Government Pension Investment Fund (GPIF). The pension scheme entered the asset class this year through an investment it made alongside Development Bank of Japan in Global Strategic Investment Alliance, a pooled investment vehicle spearheaded by OMERS. The investment will give GPIF exposure to North American and European infrastructure.
The majority (33%) of the top 100 Asia-Pacific institutions are banks. This is hardly surprising considering banks are significant infrastructure players in the region. Indian banks, for instance, have been active in the private infrastructure fund space with notable banks such as Bank of India, Canara Bank and Oriental Bank of Commerce investing in IL&FS Infrastructure Debt Fund - a private vehicle with a focus on Indian infrastructure. Insurance companies (26%), asset managers (10%), corporate investors (8%) and sovereign wealth funds (8%) comprise the remaining top five investor types in infrastructure.