Institutional investors are becoming an integral source of direct investment for infrastructure projects, according to Preqin’s latest research.
The research estimates that these institutions have invested directly in infrastructure deals valued at a total of US$237bn over the course of 2012 and 2013, compared to an estimated US$202bn over the two years prior.
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Since 2007, the value of transactions involving direct investment by institutional investors has accounted for approximately 34% of the total value of capital invested in infrastructure assets. Furthermore, these institutions have been active direct investors in almost a quarter (22%) of all infrastructure transactions over the same period.
Other Key Facts on Direct Infrastructure Investing:
- Overall, 35% of institutional investors on Preqin’s Infrastructure Online* invest directly in infrastructure projects and assets.
- Collectively, these institutions have in excess of US$31tn in assets under management and have US$226bn invested in infrastructure.
- 47% of investors with US$10bn or more in assets under management look to invest directly in infrastructure projects. This compares to 25% of investors with less than US$1bn in AUM.
- The proportion of investors that invest directly varies significantly by country; over half of Canada – based investors (52%) invest directly, compared to only 15% of US – based investors. Japan has the second highest proportion of direct investors, with 41% of institutions based in the country doing so.
- 2012 saw the greatest level of direct investment undertaken by institutional investors in infrastructure; a total of 171 transactions involved direct investment from institutional investors, with an estimated aggregate deal value of US$127bn.
- The 1Malaysia Development Berhad investment in Malaysia – based 3B Power Plant and the CDP Capital investment in UK – based London Array Wind Farm are two notable examples of recent direct institutional investment in infrastructure assets.
Andrew Moylan, head of Real Assets Products, Preqin, said: "With almost a quarter of deals each year now being financed either entirely, or in part, by investors committing capital directly, these institutions are an essential pool of capital for infrastructure projects looking for funding. The proportion of active investors in infrastructure seeking to invest directly in assets is at an all – time high ; however, this is largely concentrated among bigger investors with a more established allocation to the asset class that are likely to have a dedicated investment team. With investors continuing to search for yield and strong long – term returns to meet future liabilities, as well as seeking to avoid third party manager fees , direct investment activity by institutions is likely to grow."
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData
