In 2013, the top 100 infrastructure investors (by current allocation) primarily focused on developed markets, specifically Europe (71%) and North America (64%). As of May 2014, this remains relatively stable with 74% of the current top 100 investors targeting European investments and 58% targeting North American assets. Investments made in North America and Europe remain attractive to these infrastructure investors due to the strong regulatory framework and risk/return profile.
Appetite for investments in Asian and South American assets has significantly increased among the top 100 investors over the past 12 months. Fifty-five percent of the top 100 infrastructure investors have a specific preference for Asia-based infrastructure, compared to 45% in 2013. Appetite for South America-based assets has also showed a marginal increase, rising from 20% to 24% in 2013. However, interest among the top 100 investors in Africa-based infrastructure has remained steady at 9%; this is due to the high risk atmosphere in the continent.
In terms of strategy, 98% of the top 100 investors have a preference for the primary strategy. Forty-seven percent of these LPs will invest via the debt strategy, 8% favour secondaries funds, and 2% will access the infrastructure market through fund of funds vehicles.
These institutions source capital for infrastructure investments from a variety of areas. However, a majority of these LPs (67%) have a separate allocation to infrastructure funds. This is followed by the investors who invest in the asset class via its private equity allocation (6%), real assets allocation (6%) and general alternatives allocation (6%).
Public Pension funds are the most prevalent in the top 100 infrastructure investors, making up 21% of the total. Asset managers (19%), insurance companies (14%), superannuation scheme’s (12%) and private sector pension funds (9%) round out the top 5. In terms of route to market for the top 100 infrastructure LPs, commitments to listed infrastructure vehicles are the most common, with 92% of investors targeting this strategy. Ninety percent of these investors will consider making unlisted investments, and 69% will invest via listed funds.