Infrastructure managers from the OECD are increasingly tapping into Asia as a source of capital.
Speaking to Infrastructure Investor, blue-chip Western-based managers said the market is difficult to penetrate, with Asian investors apt to take their time before committing to an investment and valuing personal relationships more than their American and European counterparts. But for persistent fundraisers, a sizeable payoff awaits, as infrastructure’s low risk profile fits the needs of many Asian investors.
“The Asian market has discovered infrastructure as an asset class,” said Mathias Burghardt, head of infrastructure at Ardian. The French firm raised 20 percent of its €2.65 billion Infrastructure Fund IV from institutions based in the region, more than doubling the proportion of capital sourced from Asia compared to its previous fund.
The trend is gathering momentum. When Brookfield Infrastructure Partners raised its then-record $14 billion Fund III last year, approximately 20 percent came from 20 Asian investors, a total “substantially higher” than previous funds. Next time, that share could be as high as 50 percent, the firm told Infrastructure Investor at the time..
“I am a huge believer in this market,” said Vincent Levita, founder and chief executive of Paris-based InfraVia. His firm began fundraising in Asia for its third fund, which closed last year at €1 billion.
When it comes to infrastructure investment, Japan and Korea are two of the most developed markets, while China may be catching up, managers said. Malaysia and Singapore are also emerging as sources of capital, with knowledgeable and sophisticated investors warming up to the asset class.
Although it may take a great deal of legwork and a few intercontinental flights to get Asia’s investors on board, managers reckon they are likely to return for future funds.
“Once you are there and you have delivered what you have promised, they are very loyal,” Burghardt noted.
Find out more about Asian LPs in the April issue of Infrastructure Investor, which will feature a section dedicated to the region.