Outlook 2016: Pedal to the metal

A slight slowdown in fundraising this year serves as a breather for what is sure to be a bumper 2016.

By this point you've probably read it to exhaustion but 2016, driven by what could be record fundraisings from Brookfield and Global Infrastructure Partners (GIP), looks set to be a bumper year.

To put things into perspective, the combined $27 billion due to be raised for the two fund managers' vehicles is easily more than half the total $41.88 billion collected for unlisted funds during 2015, according to Infrastructure Investor Research & Analytics. Considering that $27 billion comes from Brookfield and GIP alone, when 2016 ends, we could hit an all-time infrastructure fundraising high that will comfortably surpass the $50.57 billion raised in 2014.

Looking back till 2008, 2015 emerges as the second-strongest year for infrastructure fundraising – although, at 53 funds closed and $41.88 billion raised (bar any last minute adjustments), it still trails quite a bit behind last year (which saw 59 funds closed).

In volume terms, 2015 looks remarkably similar to 2010, which witnessed the market bounce back strongly after dropping off a cliff in 2009 to raise $41.69 billion. The big difference between the two years is in the number of funds raised – 2010 saw 71 funds closed.

That consolidation trend of fewer manager raising progressively larger amounts of money has already been happening for a few years. It is likely to accelerate next year, again in large part helped by Brookfield and GIP's fundraisings.

Another trend that has already started this year and is due to gain traction in the next one, particularly in Europe, is the opportunities offered by a much more benign fundraising environment. As Threadmark partner Bruce Chapman put it in our recent European fund management roundtable: 

“The doors that are opening in this cycle pertain to certain strategies, like opportunistic infrastructure. If you tried raising an opportunistic fund two or three years ago that would've been really tough. We did a greenfield PPP strategy fundraising which we see as pretty low risk and it took us a few years to do that. Now, we think the market is turning for that sort of strategy.” 

All of which points to a very strong 2016 indeed.