Fundraising

Infrastructure fundraising reaches post-2008 peak

Global infrastructure funds closed on $20.8bn of new capital in 2011, the largest amount raised since 2008. The year ended strongly, with almost $9bn raised in the final quarter – including the $3bn first close of GIP’s second fund.

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Infrastructure fundraising packed a punch in the final quarter of 2011, according to the latest update from placement agent Probitas Partners. For most of the year, it looked as if the post-Crisis fundraising recovery seen in 2010 would stall. But the fourth quarter saw $8.9 billion raised – taking the 2011 total to $20.8 billion and surpassing the $19.0 billion collected in 2010.

While the final figure will probably come as a pleasant surprise to many, it should be viewed with caution. Over 50 percent of the money raised in the fourth quarter came from just two large US-based funds – Global Infrastructure Partners (GIP), which achieved a first close of $3 billion on its second fund; and ArcLight Capital Partners (ArcLight), which raised just over $1.8 billion, allowing it to close its fifth fund on $3.3 billion.  

Therefore, extrapolating a trend would be premature and the jury is out on whether the momentum will be maintained in 2012.

The fourth quarter saw just three funds closing on $500 million or more. In addition to GIP and ArcLight, UK-based greenfield specialist InfraRed Capital Partners closed its first fund following a spin-out from HSBC on $1.2 billion. A total of 18 funds had closes during the period, seven of which were final closes. Of the seven final closes, four raised less than their initial targets.

The report says there are currently 12 funds in the market with a target of $2 billion or more, eight of which have already had at least one close. In total, there are 125 funds either in the market or coming to market, seeking a collective total of nearly $90 billion.

The distribution by strategy of funds seeking capital is “roughly similar” to that of funds that closed in 2011, but Probitas notes the emergence of debt-focused funds – a “newer segment of the market” – and “small first-time” emerging markets vehicles. 

Following the 2007 peak of $39.7 billion, infrastructure funds raised $24.7 billion in 2008 and then hit a low of $10.7 billion in 2009.