Infrastructure attracts just one in five investors
Fewer than one in five institutional infrastructure investors have committed money to a new infrastructure fund this year. These funds are trying to raise $115bn (€77bn) from investors; but weak demand raises questions about whether or not they will reach target size.
A survey conducted by alternative assets research firm Preqin found that 81% of investors have not made any new commitments in 2009, 14% have invested in one fund and 5% have invested in more than one fund.
Of the majority who have not committed anything to infrastructure funds, two thirds had already reached their target allocation, 30% had postponed commitments, and 5% had cancelled commitments outright, according to the research.
However, 40% of the polled investors will make at least one new commitment in the coming year and a third are as yet undecided. Over the longer term, three quarters of respondents said they would "definitely" be investing in unlisted infrastructure funds.
There are now 119 funds seeking to raise $115bn (€76.85bn) that said they will not all be able to achieve their target assets, based on current sentiment, according to Preqin.
A spokesman for Preqin said: "Although fundraising over the course of the past year has fallen dramatically, investors are generally still positive towards infrastructure funds and our survey would suggest that investors will start to return to the market over the course of the next year.
"However, commitment levels have been very low and there are concerns amongst a large proportion of the infrastructure investor community relating to the viability of certain types of investment, and also with regard to the fees imposed by the funds themselves."
Preqin interviewed 42 institutional investors in unlisted infrastructure funds for the survey, which it conducted this month.
– Write to: pcraig@efinancialnews.com
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