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Just four infrastructure funds reach a final close in Q1 2015

This extract from the Preqin Quarterly Update: Infrastructure, Q1 2015 reflects on the first quarter’s infrastructure fundraising activity.

Fundraising for unlisted infrastructure funds declined in Q1 2015, with just four funds closing, raising an aggregate USD5.3 billion in institutional capital (Fig 1). This represents the lowest amount of capital raised in a single quarter since Q3 2013, when USD4.8 billion was raised. However, those fund managers that are closing funds are often raising large amounts of capital; the average fund size has increased from USD503 million for funds closed in 2011 to USD984 million in 2014.

This trend is reinforced by the fact that since 2010, managers have been increasingly meeting or exceeding their fundraising targets. Having dropped to a record low of 84 per cent for funds closed in 2009 and 2010, the proportion of target size achieved by unlisted funds grew to 96 per cent in 2013 and 106 per cent in 2014. As a result, despite fewer funds reaching a final close and the aggregate capital raised declining for the last four consecutive quarters, fund managers that do reach a final close are increasingly able to reach or exceed their target size, as investors look to invest their capital with the handful of more experienced infrastructure fund managers. 

However, the length of time spent fundraising prior to reaching a final close is on the rise, with Fig.2 revealing that from 2008 to 2014, the average time spent on the road has increased from 15 months to 23 months, reflecting the tough fundraising market and the challenges managers face closing funds. 

The largest unlisted infrastructure fund to close in the last 12 months is Energy Capital Partners’ Energy Capital Partners III, which targets investments in North American energy infrastructure, including power generation, renewables, electric transmission and midstream gas sectors. The largest unlisted infrastructure fund to close in Q1 2015 was the EUR2 billion First State European Diversified Infrastructure Fund, which principally targets investments in mature, European economic infrastructure assets. This was followed by P2Brasil III, which secured USD1.6 billion in investor capital. Equis Funds Group closed two funds in Q1, raising USD1 billion for Equis Asia Fund II, which invests in core Asian infrastructure assets, with a particular focus on the energy sector in China, Indonesia, Malaysia, Philippines, Thailand and Vietnam, and USD300 million for Equis Direct Investment Fund, which will allocate further capital to the portfolio held by Equis Asia Fund I.

Preqin releases quarterly reports covering private equity, hedge funds, infrastructure, real estate and private debt. All five quarterly updates can be accessed for free in our Research Center.

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