GLOBAL – Institutional investor appetite for infrastructure is reaching record highs, with capital commitments to unlisted infrastructure funds increasing by 77% in the first half of this year, according to a report by Preqin.
Preqin said unlisted infrastructure funds secured $14.5bn (€11.1bn) of fresh capital from investors since the beginning of 2013, a substantial increase on the $8.2bn raised over the same period last year.
The report found that the six funds that reached a final closing in the second quarter of this year contributed as much as 40% of the total capital raised since January.
It also showed that 144 unlisted infrastructure funds were currently in market, targeting $93bn in investor capital.
Preqin said unlisted infrastructure fund managers reported 65 deals in the second quarter, slightly more than the number of deals completed in the first quarter, when 59 deals were reported.
Elliot Bradbrook, manager of infrastructure data at Preqin, stressed that the market would remain highly competitive in the months to come.
“The infrastructure fundraising market remains strong in Q2 2013, with funds closed in the quarter raising a respectable $5.9bn in investor commitments, alongside $2.4bn in interim closes,” he said.
“Though fundraising is set to remain competitive, with funds seeking an aggregate $93bn in investor capital, there is still substantial investor appetite for the asset class, and this will likely drive further fundraising success in 2013 for fund managers that can demonstrate a consistent track record and investment strategy.”
A previous report by Preqin already noted that institutional investors were increasingly looking to allocate fresh capital to infrastructure projects.
However, Brooke conceded that, at the time, in spite of this momentum within the fundraising market, fund managers would face some competitive issues this year.
He said fundraising conditions remained challenging for most infrastructure fund managers going into 2013, with a large number of funds on the road targeting investors now considerably more conservative than in the past.