Infrastructure to the rescue

The $15 billion of capital raised or targeted for infrastructure investment this week is one route for investors, managers and their banking partners to escape the credit mire, writes Nicholas Lockley

Kohlberg Kravis Roberts is the latest firm to declare its interest in infrastructure with a planned $5 billion (€3.23 billion) fund, according to the UK newspaper Financial Times.

This week Global Infrastructure Partners completed fundraising for its flagship first fund, with total commitments of $5.64 billion (€3.65 billion).

As did Morgan Stanley Infrastructure Partners, which closed its latest infrastructure fund on $4 billion (€2.6 billion) – above its initial target of $2.5 billion.

Adebayo Ogunlesi, Global’s chairman and managing partner, said: “In these times of extreme market volatility and ever more cautious investment strategies, the size and diversity of GIP’s investor commitment is particularly notable.”

Indeed. What is not to like about infrastructure?

It provides services and products essential to people’s lives. People don’t cut back on their water intake in a recession; they still need power; they need roads to drive on. The list of opportunities is long; the geographies are vast; the trend to public-private partnerships seemingly unstoppable.

The logic is impeccable. And certainly the banks think so. These are assets they can get their arms around. Assets they can lend to without their credit committees having to agonise too long or hard.

And even if the already spectacular growth of infrastructure managers explodes exponentially, this is still a multi-trillion dollar global market.

Surely there’s room for a few more funds yet? KKR is unlikely to be the last buyout house to choose this moment and this asset class for its diversification.