Private equity infrastructure fundraising rises five-fold in two years
Private equity infrastructure fundraising has increased by five times in the last two years, with almost half of investors having a separate allocation of funds in the sector.
According to data provider Private Equity Intelligence, unlisted infrastructure funds worth a total of $34.9bn (€21.9bn) were raised in 2007. This was a 429% increase on the $6.6bn raised in 2005.
A record number of funds are also on the road in 2008, Prequin’s Infrastructure Review has disclosed. Funds worth $13.2bn (€8.3bn) have already been raised, while there are 71 funds being raised globally worth a combined total of $90.8bn (€57.1bn). The largest proportion of these is outside of the US and Europe, with 33 focused on Asia and the rest of the world. However the highest value of funds sought is in the US, where 15 funds are raising $34bn (€21.4bn).
The report follows news by Private Equity News earlier this month that firms are rushing into the infrastructure arena to raise specialist funds for the first time. French alternatives asset manager Unigestion, Swiss asset manager Partners Group and UK private equity firm Pantheon Ventures will raise dedicated infrastructure funds of funds this year.
3i’s listed infrastructure fund launched a £114.6m (€144.3m) share placing last month to fund further acquisitions as it reaches the end of its proceeds from its float last year. It has invested £661m (€832.4m), or 95%, of the proceeds from its initial public offering. US alternative assets manager Carlyle Group launched its debut infrastructure fund last year with $1.15bn (€722m).
The Prequin report also showed 47% of investors view infrastructure as a separate allocation class to their private equity allocation. A similar amount of investors (43%) view it as part of private equity.
Richard Stus, a spokesman for Prequin, said: "There have been concerns from some commentators that fundraising for the unlisted infrastructure market has left the industry awash with surplus capital and that current levels of fundraising are unsustainable in the long term. However, with significant new markets opening up... we expect to see more opportunities available to fund managers than ever before.
"With uncertainties continuing to surround financial markets worldwide, many investors are turning to infrastructure in order to add stability to their portfolios."
Today, private equity fund Global Infrastructure Partners announced it has joined an $8bn (€5bn) proposal to buy a Canadian power generation company two months after GIP closed a large fund to investors. LS Power Equity Partners, an asset manager focused on the power sector, and GIP, founded and managed by former executives of Credit Suisse and General Electric, have jointly made a proposal to acquire the stock of TransAlta Corporation and take it private for C$39 a share in cash.
-- Write to Paul Hodkinson at phodkinson@efinancialnews.com
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