Data for the four-month period ending April 30, 2019, indicate expectations for another record-breaking year are well-founded, but they also demonstrate that the trend towards larger and fewer funds continues, with the average fund size nearly doubling on a year-on-year basis from $1.26 billion to $2.23 billion.
More than half of the $22.3 billion total raised came from two European managers – Sweden’s EQT, which closed its Infrastructure Fund IV on €9 billion in March, and France-based Ardian, which raised €6.1 billion for its Infrastructure Fund V. Both firms exceeded their targets. While EQT’s fund will invest in Europe and North America, Ardian’s will focus exclusively on Europe.
Aside from raising the second-largest fund in this period, Ardian also helped China’s Ping An Insurance Overseas, the asset management arm of Ping An Insurance, reach a final close on its recently launched fund of funds strategy. Ping An Global Infrastructure Funds – a structure comprising two funds – reached a final close on $758 million in mid-April with Ardian as an anchor investor.
Another France-based manager also contributed to the fundraising total. Meridiam’s Africa Infrastructure Fund closed on €546 million in a second round of fundraising that finished at the end of March. The vehicle initially launched in 2015 and fell short by €93 million in its first fundraising round. It targets the energy, water, waste and transport sectors and has fully deployed capital from the first €207 million round in 14 projects, all certified by the UN’s Sustainable Development Goals.
While the vast majority of the capital raised, including by these four funds, will be deployed across a number of infrastructure sub-sectors, one sector-specific vehicle made its way into the top five of funds closed. Grain Management, a private equity firm based in Washington DC, is betting big on the telecoms sector, closing its Grain Communications Opportunity Fund II on $900 million. According to its website, the firm invests in fibre, towers, broadband, small cells and satellites in North America.
Energy transition once again proved its appeal to investors, with four of the 10 funds closed between January and April – the Low Carbon Power Fund, New Energy Capital Infrastructure Credit Fund II, InfraGreen III and Mirai Renewable Energy Fund – focusing on clean energy and raising a combined $2.71 billion.
While there’s still plenty of time for things to change in 2019, all the signs to date point to a bigger and better year for infrastructure fundraising.