Unlisted infrastructure fundraising stayed strong in the first part of 2019 after an unprecedented period of momentum. More funds are coming to market to seek capital from investors, whose appetite for the asset class remains substantial.
Q1 hedge fund letters, conference, scoops etc
Enthusiasm for infrastructure has several drivers: the likes of China’s Belt and Road Initiative and the US Government’s infrastructure program have highlighted massive global infrastructure deficits, drawing new investors and capital to the asset class. At a time when correlation between asset classes is very high, infrastructure projects are often largely uncorrelated, helping to diversify and protect investors’ portfolios; and, with widespread concerns about diminishing yields in other asset classes as well as a potential market downturn, infrastructure assets can provide a stable income and hedge against inflation.
Given these conditions, it is no surprise that 2018 proved a banner year for the industry, and there is every indication that 2019 will follow the same path. Of particular note are the largest funds currently in market: Global Infrastructure Partners IV and Brookfield Infrastructure Fund IV are each targeting $20bn, suggesting that these experienced fund managers anticipate a great deal of potential allocation from investors to infrastructure. This is in addition to open-ended vehicles like Blackstone Infrastructure Fund I, which is seeking $40bn from investors in 2019.
Infrastructure is not immune to the capital concentration and increased competition trends that have sculpted challenging conditions in other asset classes, but there is such strong momentum behind the industry at the moment that it is difficult to see these challenges slowing its growth in the coming months.
For more in-depth analysis on fundraising, fund currently in market, investors and more, download your copy of the Preqin Quarterly Update: Infrastructure, Q1 2019.
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