Europe-focused infrastructure funds have continued their strong fundraising in 2015, with 12 funds reaching a final close raising an aggregate EUR9.4 billion in investor commitments. This total follows the EUR9.6 billion raised in 2014, and
approaches the EUR10.5 billion raised by funds closed in 2013. This level of fundraising compares to 2007/8, when Europe-focused infrastructure funds raised EUR11.7 billion and EUR10.1 billion respectively.
Although it has seen several consecutive years of strong fundraising, the infrastructure industry seems to be following the trend seen in other alternative asset classes, as more capital is concentrated among fewer investment managers. The 12 funds closed in 2015 YTD is the lowest total since 2009, down from 21 Europe-focused funds that closed in 2014.
All of the funds closed in 2015 YTD have finished above their initial target. This follows a consistent trend in the market: 32 per cent of funds closed in 2013 exceeded their targets; 50 per cent of funds in 2014 did; now 100 per cent of funds in 2015.
Europe-focused infrastructure funds closed in 2015 YTD have spent an average of 28 months on the road, up from 20 months for funds closed in 2012. Of funds closed in 2014-2015 YTD, 45 per cent spent more than two years being marketed to investors.
The average size of Europe-focused infrastructure funds closed in 2015 YTD is at a record high. Average fund size has increased year-on-year from a low of EUR227 million in 2012 to EUR945 million in 2015 YTD.
As of December 2014, Europe-focused infrastructure funds held an estimated EUR80 billion in assets under management, a record high. This includes EUR29 billion in unspent capital (dry powder).
The average size of unlisted infrastructure deals in Europe has risen 87 per cent in two years. The average deal size in 2013 was EUR278 million, but this has increased to EUR519 million in 2015 YTD.
The proportion of European infrastructure deals worth EUR1 billion or more is at a record high of 18 per cent in 2015 YTD. Correspondingly, the proportion of deals worth less than EUR100 million has decreased from 53 per cent in 2014 to 35 per cent this year.
More than half (58 per cent) of Europe-based investors are currently below their target allocation to infrastructure, demonstrating that a significant pool of potential capital is likely to flow into the asset class in the coming years.
“The continued strong fundraising for European infrastructure funds seen in recent years reflects continued institutional demand for infrastructure exposure to stable markets with reliable regulatory frameworks,” says Andrew Moylan, Head of Real Assets at Preqin. “While there are a wide range of opportunities available, the considerable demand has caused rising valuations and deal values have increased sharply this year. The current trend in fundraising, with more capital being concentrated among fewer managers, is reflective of investors’ desire to stick with managers whose track record is proven.” 

