Unlisted infrastructure funds have an all-time high of US$93 billion in capital available for investment in infrastructure, or dry powder, as of October 2013, a 33% increase compared to the US$70 billion available to unlisted infrastructure funds in December 2010, according to Preqin’s research.
Geographically, the largest proportion of the capital available to unlisted infrastructure funds, at US$42 billion, is set to be invested in North American infrastructure opportunities. This is higher than the US$33 billion set to be invested by unlisted infrastructure funds in European assets and the US$18 billion that is set to be put to work in infrastructure opportunities in Asia and other regions outside of North America and Europe.
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Other Key Facts:
- Smaller unlisted infrastructure funds, those less than US$500 million in size, have represented an increasing proportion of all capital available to unlisted infrastructure funds each year, growing from 11% of total dry powder in 2009 to 21% in 2013 so far, as a result of more new players entering the infrastructure fund market.
- Although mega funds, those US$2 billion or more in size, still account for the largest proportion of capital available to unlisted infrastructure funds in 2013, this has declined from 59% in 2007 to 40% in 2013 so far.
- Institutional investor appetite for infrastructure remains strong: 63% of infrastructure investors expect to commit more capital to the asset class in the next 12 months compared to the last 12 months; a further 27% plan to commit the same amount of capital.
- Unlisted infrastructure fund managers have completed 254 transactions in 2013 to date, compared with 405 in 2012 and 389 in 2011.
Elliot Bradbrook, manager, Infrastructure Data, Preqin, said: "The infrastructure asset class has grown significantly in recent years, with strong investor appetite for infrastructure investment driving substantial growth in fundraising. While this strong fundraising market has resulted in unlisted infrastructure fund managers having record levels of dry powder available to invest, there are ongoing issues impacting deal flow, such as high asset valuations caused by the higher levels of capital being raised and greater interest in the most desirable assets.
"Fund managers may not be prepared to pay a higher price for assets that are not forecasted to provide significant levels of return. Unlisted infrastructure managers will certainly be looking to put their substantial reserves of capital to work, but high asset valuations may continue to hamper deal flow in the coming months."
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