Infrastructure towering ahead

The infrastructure market has grown almost ten-fold in four years according to Private Equity Intelligence (Preqin).

The UK research specialist has published the 2008 Preqin Infrastructure Review, which revealed that the aggregate capital rose from US$3.7bn to US$34.9bn from 2004-2007.

Growth looks set to continue as infrastructure funds in 2008 have already raised US$13.2bn.

Preqin argues the most significant factor that has contributed to the strong performance of unlisted infrastructure is said to be US authorities increasing acceptance of private and foreign investment in public infrastructure assets.

Over the past four years, 20 funds primarily focused on North America have closed raising US$41.5bn, with a further 17 funds currently on the road seeking an aggregate total US$27.3bn.

Further evidence of the scale of the infrastructure market can be seen from two funds that closed in May that raised almost US$10bn. The largest of the two was Global Infrastructure Partners (GIP), a New York-based firm set up Credit Suisse and US conglomerate General Electric which raised US$5.64bn for its first fund. The second fund raised was Morgan Stanley Infrastructure Partners, which closed on US$4bn, smashing its target of US$2.5bn.

The report also observes how the infrastructure market has changed over the last few years, growing from a niche sector of the private equity industry to being what many in the industry regard as a separate asset class. Forty-seven percent of active investors in the asset class have established a separate allocation of infrastructure, while 43% include infrastructure funds in their private equity portfolio and 10% include it in their real assets portfolio.