A tale of two rankings

Our II 50 ranking of infrastructure’s largest equity investors reveals a lot of concentration at the top while our debt awards show funding moving away from banks towards private capital.

Next week, we are celebrating the best of infrastructure equity and debt with the publication of our newly expanded Infrastructure Investor 50 ranking and our revamped Debt Awards for Excellence, which highlight last year’s most innovative infrastructure debt financings.

For the past six years, we have identified the 30 largest infrastructure equity investors with our II 30 ranking. This year, though, we have decided to officially add 20 firms to it in recognition of something we have been writing about pretty much non-stop: that infrastructure is attracting record amounts of capital as it continues its inexorable march to the mainstream of investing.

In doing that, we have found a peculiar thing – of the $282 billion amassed by the 50 firms in our ranking, $117 billion is in the hands of the top five infrastructure firms. That means that a staggering 42 percent of the capital contained within our II 50 ranking is concentrated with just five firms.

So what does this mean, in practice? For a start, you now need $12.52 billion to make it into the top five versus last year’s $8.43 billion. Last year’s fourth spot holder had raised $9.59 billion; this year’s number four holds that position with $19.25 billion. That difference is drawn into even sharper relief when you take into account that the only firm that had raised over $20 billion in 2015 was our ranking leader: Macquarie Infrastructure and Real Assets. This year’s number one raised just shy of $33 billion.

In short, if you are part of the cream of infrastructure managers – what we jokingly call ‘infrastructure’s 1 percent’ in our upcoming issue – you are now able to raise phenomenal amounts of money, the kind of money that would make even some large private equity managers more than a little envious. The further you move from the top, however, the less you will be uplifted by this rising tide, though there is evidence of a general increase in fund sizes (again, for successful managers only) across the board.

Funnily enough, our Debt Awards for Excellence (formerly known as the Banking Awards for Excellence) have moved in the opposite direction. While infrastructure financing was once concentrated in the hands of the banks, this year’s awards show a much more even division of labour, with banks funding deals alongside institutional capital. Institutional investors – whether directly or through infrastructure debt managers – are not only present alongside banks in many of the industry’s flagship deals, they are increasingly taking the lead in some of them.

But even in projects where private capital doesn’t take the lead, it can often be found working alongside banks. This heralds a material change, as our three-man judging panel concluded, that has been a long time coming: banks and private capital are now well on the road to a mutually beneficial division of labour, one that often sees banks arrange or take charge of the shorter-term portions of a project’s financing, with institutional investors taking over for the long term.

Still, that doesn’t mean banks don’t feature prominently in our awards. In fact, the single biggest winner by individual nominations is a bank, with the second spot a tie between a bank and a private debt manager.

So two rankings telling two very different stories about where the infrastructure equity and debt markets are headed. And the winners? Keep your eye on the website next week to find out.

Write to the author at bruno.a@peimedia.com