As H1 2015 came to a close, global- and energy-focused funds championed the best result for unlisted infrastructure fundraising since 2008, while mature market fundraising had its weakest start since 2010, according to data gathered by Infrastructure Investor's Research and Analytics team.
Unlisted infrastructure fundraising continued its rising trend, with closings slightly beating out H1 2014 at $21.1 billion from 33 funds as compared to $20.9 billion raised in H1 2014 with a full year that saw 60 fund closings. After dipping slightly in 2011 to $14.4 billion from $15.5 billion the year prior, unlisted infrastructure fundraising grew to $14.5 billion in 2012 before jumping to an even $20 billion in 2013.
In each year since 2010, fund closings in H2 have surpassed H1 numbers in both volume and quantity.
Though the number of funds to close increased, the average size shrank significantly in H1 2015 to $640 million from a record $875 million in 2014 and $703 million in 2013.
Top closers were led by Blackstone Energy Partners II, a global fund managed by The Blackstone Group that raised $4.5 billion. I Squared Capital 's ISQ Global Infrastructure Fund came in second, closing on its hard cap of $3 billion to become the largest first time-fund closed since 2009. Colonial First State Global Asset Management 's First State European Diversified Infrastructure Fund (EDIF) which is focused on Western Europe followed, raising $2.21 billion.
Others to top the list were Apollo Global Management 's North America-focused Apollo Energy Credit Opportunity Fund, which closed at $1.1 billion, and First Reserve Corporation 's Latin America-focused First Reserve Pemex Joint Venture and Pantheon Ventures ' Pantheon Global Infrastructure Fund II, both of which closed at $1 billion.
Following the trend of the past two years, more than half of the funds in market – 55 percent this year – took less than six months to reach close, including the $4.5 billion Blackstone fund. Twenty-seven percent of funds took one or two years to raise capital, including the $3 billion I Squared, which was in market for 21 months.
By sector, energy funds far trumped others, comprising 67 percent of fundraises. Renewables and transportation accounted for 18 percent each, with social infrastructure clocking in at 12 percent. Water and waste accounted for 6 percent and telecoms for 3 percent.
In mature markets, both economies and unlisted infrastructure funding saw a weak start in H1 2015. Real GDP in the US contracted by 0.2 percent in Q1, and GDP in the UK shrunk 0.3 percent in the same period, the slowest pace in three years.
Meanwhile, only 36 percent of capital raised in H1 2015 targeted North America and/or Western Europe, similar to 2012, which saw the lowest percentage since 2010.
By geography, global/multi-regional funds far outpaced those funds with a tighter focus, accounting for $11.6 billion, or more than half of the $21.1 billion total. Western European-focused fundraises accounted for $3.7 billion, North America for $3 billion, Latin America for $1.5 billion, and Asia-Pacific for $1.1 billion. Central/Eastern Europe and Middle East/Africa funds each only raised about $100 million and Pan-European funds were a no-show.
Funds in Market
Global-focused and multi-regional funds are leading the way in terms of capital targets for funds in market, followed closely by North America-focused funds, with a combined total of $159.8 billion being sought by 248 unlisted infrastructure funds in market. Forty-nine of those funds were launched this year.
By number of funds in market, however, North America leads the way at 69, followed by global-focused funds at 46. This was followed closely by Asia-Pacific's 41 funds and Western Europe's 40 funds. Latin America is the focus of 19 funds in market, and there are 16 Pan-European funds, 15 Middle East/Africa-focused funds, and two CE Europe funds.
The largest unlisted infrastructure fund reported in market or coming to market at the close of H1 2015 was Legal & General Investment Management 's Legal & General UK Fund – Co-investment with a target size of $22.69 billion and a focus on Western Europe. Alinda Capital Partners ' global-focused Alinda Infrastructure Fund III and IL&FS Investment Managers ' Asia Pacific-oriented IL&FS Infrastructure Debt Fund followed with $5 billion targets.
Again, energy funds top the list of funds in market, accounting for 60 percent of the total. This is followed by renewables, which accounted for 40 percent of funds; transport comprised 24 percent; social infrastructure 14 percent; water 13 percent; and telecoms 9 percent.