Infrastructure managers hoping to raise funds in the current economic environment should look for “non-traditional” sources of capital and be more targeted in which LPs they approach for capital.
Paul Woodbury, co-head of Henderson Equity Partners’ infrastructure team, presented this and other advice to an audience of delegates gathered at PEI’s Infrastructure Investor Forum in Berlin Tuesday.
Woodbury advised delegates to seek “non-traditional” sources of capital, which would be investors other than the large European pension funds that were early adopters of infrastructure as an asset class. The European pensions last year accounted for 48 percent of LP capital in infrastructure.
Woodbury said that a year ago, sovereign wealth funds would have qualified as a source of non-traditional capital. In the current environment, Woodbury said there are “new types of institutions” in countries with trade surpluses such as China that are focused on promoting exports and could be valuable sources of capital to infrastructure funds. He did not name any specific examples.
He said engaging those kinds of institutions would be important because European pensions are unlikely to make significant new commitments to infrastructure in the near term. Currency swings have negatively impacted the pensions' undrawn commitments and decreases in their asset values have forced them to become over-allocated to the asset class, Woodbury said.
“My expectation is that there will be a shortage of debt and equity in coming years in our asset class, so these are interesting times,” Woodbury said.
Woodbury also offered more general advice on fundraising. He advised fund managers to be more targeted in talking with LPs and to and to consider more closely the importance of relationships in meeting fundraising targets.
“It simply comes down to people you know,” Woodbury said.
Aside from his role at Henderson, Woodbury is also the chairman of UK construction company John Laing, which is a major investor in concession-based infrastructure.