The quarterly research from Preqin shows that although only five unlisted infrastructure funds closed in Q1 2014, the aggregate capital raised represents a solid quarter, with the total capital secured exceeding the amount raised in Q2 or Q3 2013, but falling short of the $20.4bn raised by the 22 funds which closed in Q4 2013.
Capital raised over the last 12 months by unlisted infrastructure funds amounts to a total of $39bn, similar to the aggregate $37bn raised in the 12 months prior to that.
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However, the number of funds that have reached a final close has declined; in the last 12 months 47 funds closed, compared to 59 in the 12 months previous to that, with the average fund size increasing from US$697mn to US$937mn. This demonstrates the greater concentration of capital among fewer fund managers, as investors become increasingly selective in deciding where to place their capital. In the past year, 78% of aggregate capital raised was secured by funds which raised US$1bn or more.
- Energy Capital Partners raised the largest fund that closed in the quarter, securing US$5.01bn for Energy Capital Partners III, while LS Power Group closed its LS Power Equity Partners III on US$2.01bn.
- A further 11 funds held interim closes in the quarter, raising a further US$2.2bn.
- Overall, 46% of unlisted infrastructure funds currently in market have held an interim close, raising an aggregate US$44bn towards their fundraising targets.
- As of the start of Q2 2014, there are 145 unlisted infrastructure funds in market, targeting an aggregate US$93bn in capital commitments.
- 26% of funds in market are targeting US$1bn or more in investor capital, while 54% are targeting less than US$500mn in capital commitments.
- 66% of funds in market have already been on the road for at least a year.
- The largest fund currently in market is Alinda Capital Partners’ Alinda Global Core Infrastructure Fund, targeting US$3.0bn. This is followed by Pan-European Infrastructure Fund II, managed by Deutsche Asset & Wealth Management, which is focusing on infrastructure opportunities in Europe and is looking to raise 2bn in capital commitments.
- 114 infrastructure deals were completed in Q1 2014, with an estimated value of US$52bn.
Andrew Moylan, head of Real Assets Products, Preqin, said: "While the first quarter of 2014 represented a decline in the amount of capital raised compared with Q4 2013, the $8.7bn raised still represents a sizeable capital haul and reflects the relatively buoyant infrastructure fundraising market. With fewer funds holding final closes than in previous years however, it appears capital is increasingly being concentrated among a few larger players. For less well established firms, which are typically seeking to raise smaller funds, standing out from the crowd may be more difficult, but those that present a compelling strategy and take advantage of the significant institutional investor appetite for infrastructure exposure will likely be able to raise capital in the coming months."
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