II 50 countdown: 5-1

The final in our six-part countdown of the II 50, ranking the infrastructure asset class's top managers.

The II 50 countdown

A closer look at which managers made the cut (and how they got there)

Firms 50-40

Firms 39-30

Firms 29-20

Firms 19-11

Firms 10-6

The II 50 is back, and it’s a more expensive club to join than ever before.

You now need $1.98 billion to get into our ranking – versus $1.34 billion in 2017 – and a whooping $55.53 billion if you’re hoping to unseat Macquarie Infrastructure and Real Assets from the top spot, a position it’s been forcefully holding on to since 2010.

In fact, to crack into the top five, you need a minimum of $17.7 billion and at least $10.55 billion to feature in the top 10. That compares with a minimum of $13.77 billion to make the top five in 2017 and $7.41 billion for the top 10.

Going back just four years, however, it was a completely different picture, showing how much the asset class has grown in that short time period. In 2014, you could make it into the top 10 with just $4.57 billion; only two firms – GIP and Brookfield, then at numbers two and three, respectively – raised more than $10 billion; and MIRA got to the number one spot with ‘only’ $27.34 billion.

To get the full picture on how times have changed, click here for this year’s II 50 ranking, along with our methodology.

Now, we present the top five in our countdown.

5 – IFM Investors

HQ: Australia
2017 position: 4

By far the industry’s most popular open-ended fund manager, IFM Investors might have dropped a spot in our ranking, but its continued pulling power is undeniable.

Case in point: the $6.5 billion for infrastructure it amassed globally between 1 July 2016 and 30 September 2017. More importantly, IFM might, in many ways, be particularly well-prepared to capitalise on the evolution of the infrastructure market. We refer, of course, to the incremental growth in popularity of open-ended structures, which could increase dramatically once/if Blackstone (currently at number 24) raises its $40 billion open-ended vehicle.

As the asset class grows and segments, there is an increasing consensus that asset types should be driving vehicle structures and that core infrastructure, in particular, is much better suited to open-ended ones. If this trend crystallises – combined with expected demand for core assets, as the cycle turns – IFM will surely be one of its greatest beneficiaries.

4 – KKR

2017 position: 9

In what is this year’s first upset, US alternatives powerhouse KKR has jumped five spots in the ranking, overtaking IFM Investors at number four. That is not entirely surprising, considering KKR has bagged the year’s biggest fundraising, with the $7.4 billion close of its third flagship fund.

The latter represents a quantum leap for KKR, raising $2.4 billion more than its original $5 billion target and being 2.4 times larger than its predecessor. That is the result of a solid track record – as of 31 March, Fund I exits had generated a 12.4 percent net IRR – but also of its unique equity-syndications strategy.

As the manager recently disclosed, “we syndicated more capital than we invested in our [infrastructure] funds” in 2017. That has allowed it to not only demonstrate its ability to handle large transactions, but has also given prospective LPs from other parts of the business valuable exposure to the asset class, which paid off in spades with Fund III. Watch this one.

3 – Global Infrastructure Partners

2017 position: same

Easily the asset class’s premier independent fund manager, GIP, like Brookfield, is also increasingly diversifying. Sure, GIP IV – also rumoured to be raising circa $20 billion, with a final close earmarked for early 2019 – will be crucial to increasing its AUM, but the US manager’s recent moves into Asia lay the foundations for a very interesting growth story over the next few years.

We are referring, of course, to its recent acquisition of IDFC Alternatives’ infrastructure unit as well as its role at the helm of the consortium that closed the $5 billion acquisition of Equis Energy – still the industry’s biggest renewables deal. Both give it a solid footing in a promising region, with the IDFC Alternatives buy (now GIP India) setting the stage for new India-focused funds. That will add to GIP’s credit arm and Australian activities, rounding off a truly global manager.

2 – Brookfield Asset Management

HQ: Canada
2017 position: same

It might not look like it when you just focus on the figures, but Brookfield has been nipping at the heels of MIRA for quite a few years now. The question is: will it finally be able to overtake it next year? Much will depend on just how much it raises for its fourth flagship fund, rumoured to be in the market for around $20 billion.

But a lot will also depend on how quickly it diversifies. Because Brookfield – much like GIP – is not just a house of flagship funds these days – it is also the house that is diversifying, on the unlisted side, to the lower end of the risk spectrum with the launch of its open-ended Brookfield Super-Core Infrastructure Partners. The latter is expected to target utilities, telecoms, renewables, and transportation. “We don’t think that we’ve really maximised the number of people who can invest in a unique infrastructure story,” infrastructure head Sam Pollock told investors earlier this year. If proved right, the
II 50 top spot might look different in the years to come.

1 – Macquarie Infrastructure and Real Assets

2017 position: same

The II 50’s reigning champion, MIRA has topped our ranking every year since inception. It is an incredible feat – even considering how well-established the Macquarie brand is in infrastructure – one made even more impressive by MIRA’s dogged allegiance to its entrepreneurial regional-funds strategy.

While the likes of Brookfield and GIP are keeping their spots mainly due to the enormous size of their flagship offerings, MIRA is criss-crossing the globe with an alphabet soup of vehicles. There is real strength in this regional diversity, though, with the manager able to successfully tap into promising growth stories. Case in point: this year’s closing of MIRA’s second Asian fund. At $3.3 billion, it is one of the year’s biggest vehicles in a region not many managers can claim to have dedicated funds in.

“We want to be here for the next 100 years,” MIRA global head Martin Stanley told us earlier this year. Don’t be surprised if that longevity extends to the top of this ranking, too.