The first half of 2017 flattered to deceive. At face value, it was the best performing half-year in terms of capital raised by funds closed during the period (by a roomy 38 percent). Yet, key to this performance was the $15.8 billion close of Global Infrastructure Partners III – the largest private infrastructure fund ever raised – which we reported in January. Take it out of the total and H1 2017 was the worst half-year since a dismal H1 2012.
GIP’s ability to raise such a sizeable fund in a relatively short amount of time may be an indicator of the industry’s direction. However, it is by excluding GIP III as an outlier that we gain a better picture of the current state of market affairs.
With all being said, GIP III may still propel 2017 into a strong fundraising year. At the Infrastructure Investor Global Summit, held in Berlin in Q1, only 14 percent of attendees polled felt mega-funds would be more prevalent come 2020, with 52 percent expecting a shift towards more specialised strategies. It will be interesting, then, to see how investor opinion and market trends converge – if they do at all.
In this report, Steven Sonnenstein, senior director of infrastructure investment at PSP Investments, offers his views on the private infrastructure market. The benefi ts of direct investing and benchmark outperformance are two of the topics discussed. Sonnenstein also offers his opinion on how certain macroeconomic factors may affect the private infrastructure market.
* Fund in market data has been amended as of 1 August 2017.