Chart of the Week: Energy and Power Domination?

While energy & power remains the main theme, diversified strategy gains momentum.


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As to date, 2013 unlisted infrastructure fundraising has already surpassed 2012 full year number with 37 funds closed worldwide totaling over $34 billion, compared to $29 billion by 50 funds in 2012. As year-end approaches, we expect to see more fund closings before Christmas closure. In October alone, nearly $12 billion has been raised from 7 funds. The largest fund closing in the month and in 2013 ytd is Brookfield Asset Management’s Infrastructure Fund II, which has reached $7 billion in less than one year, exceeding the original $5 billion target. The global fund will invest in renewable power, transportation, utilities and energy with target allocations of 35%, 35% 15% and 15% respectively. 

In 2013, though energy & power continues to be themain theme, we saw fewer funds (49%) seek opportunities in this sector, compared to 68% in 2012. In the meantime, more funds (32% in 2013 ytd compared to 20% in 2012) claim to have diversified strategy or no sector preference, which may be responses to investors intention to diversify their portfolios. Fewer funds in 2013 have clear stated allocations to sectors such as social infrastructure, telecom and waste, on the contrary, 11% of the 2013 funds has shown interests in mining, compared to 4% in 2012. 

In near future, we may see renewable energy, water and waste treatment sectors become more active as sustainable development is a major topic in most regions. And for long term investments like infrastructure, political and legal environment is crucial for choosing sectors and regions. 

“The sectors that tend to have good regulatory environments and countries that have good legal and contracting processes tend to be more favorable to long-term investors.” Ms. Diloshini Seneviratne, Portfolio Manager of Infrastructure for California State Teachers' Retirement System, said in an interview for our Infrastructure Investor Q3 2013 Review.