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Infrastructure funds get larger in 2014 as demand sees more managers exceed fundraising targets

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Over half of infrastructure funds that closed in 2014 exceeded their fundraising target, up from 37% of funds in 2013. Andrew Moylan, Preqin’s Head of Real Assets Products, takes a look at infrastructure fundraising over the last 12 months:

The infrastructure fundraising market in 2014 saw a slight drop in total capital raised, from USD44bn in 2013 to USD38bn in 2014. Yet a more significant drop was seen in the number of funds reaching a final close; 2013 saw 69 funds reach a final close, compared to just 42 funds in 2014. As such, the average infrastructure fund size has reached levels not seen since 2007, with the average fund closed in 2014 topping USD1bn. 

Furthermore, Preqin’s latest research shows that 54% of infrastructure funds that reached a final close in 2014 exceeded their fundraising target. This is up from 37% of funds that closed above target in 2013, and is the highest proportion since 2008. A further 6% of funds closed in 2014 met their fundraising target.

USD25bn of the USD38bn raised in 2014 was raised by 19 funds focusing on North American infrastructure investments. This is an increase from the USD18bn raised by 15 funds in 2013. Elsewhere, Europe-focused fundraising saw a slight dip in 2014, with funds targeting the region raising USD10bn, less than the USD15bn raised in the previous year.

While the overall number of infrastructure funds reaching a final close was lower in 2014 than in previous years, the amount of capital being committed to the asset class is still at a strong level. Funds that closed last year raised more on average than in any year since 2007, with the majority closing above their fundraising targets, reflecting continued strong investor demand for infrastructure.

As we move into 2015, a large number of funds are in market seeking over USD90bn in capital. Investors are still looking to commit significant levels of capital to the asset class, but managers must make a compelling investment case to attract capital. Investors are becoming far more sophisticated in how they invest in infrastructure, with many increasingly targeting direct investments or co-investments. While fundraising is likely to be strong in 2015, we expect that capital will continue to be concentrated among a small number of fund managers. 

Find out more about Preqin’s data by visiting our Research Center.

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