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US-Based Investors Targeting Infrastructure in the Next 12 Months – March 2015

by Brian Chung

  • 03 Mar 2015
  • INF

Preqin’s Future Searches and Mandates feature on Infrastructure Online contains detailed profiles for 103 institutional investors planning to invest in the infrastructure asset class over the next 12 months. These institutions have aggregate assets under management (AUM) of more than $3.4tn and, on average, currently allocate 3% of total assets to the asset class, below their average target allocation of 5%.

Institutions investing in infrastructure commit capital from different sections of their portfolios, with the largest proportion of US-based investors (36%) allocating to infrastructure through their real assets allocation. A quarter of investors invest in infrastructure through their private equity allocations, with 20% carving out separate infrastructure allocations. As investing in infrastructure becomes more commonly targeted by US-based investors, the proportion of investors with a separate allocation to infrastructure is likely to rise. The remaining 6% of investors will invest in the infrastructure asset class via an allocation to inflation-linked assets or another part of their portfolio.

Unlisted fund commitments are the preferred route to market for the vast majority of US-based investors in infrastructure in the year ahead, as 95% of investors will invest in the asset class via private funds. Interestingly, direct investments in infrastructure assets will be targeted by 17% of US-based LPs investing in the asset class in the next 12 months, greater than the 9% of investors who will target publicly listed fund investments. Direct investments are more frequently utilized by institutions with greater AUM which are able to field the resources needed for due diligence.

One example of an investor targeting new infrastructure commitments in the next 12 months is District of Columbia Retirement Board, which will commit up to $135mn in a maximum of six unlisted infrastructure funds. The pension fund will commit capital to funds targeting economic assets including energy, natural resources and renewable energy. San Mateo County Employees’ Retirement Association, which recently established a 1% target allocation to infrastructure, is also seeking to make new commitments in the year ahead. The public pension fund will commit capital to unlisted infrastructure funds targeting solar energy assets.

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