Preqin has published its Infrastructure Q2 2023 report which finds that infrastructure assets have performed well, while the fund raising market is slowing.
Key report facts:
- Fundraising: Despite just USD4.5 billion in capital being secured by funds reaching their final close by the end of Q1 2023, or 16 per cent of the quarterly average since 2016, a similarly slow pace has continued into Q2 2023 which also saw USD4.5 billion secured. However, Preqin interim data shows some welcome signals of a resurgence in infrastructure fundraising. Based on fundraising for interim and final closes in the quarter, USD32.3 billion has been secured, a rate similar to the quarterly average of USD33.7 billion since 2016.
- Funds in market: The slow fundraising market is contributing to a backing up of funds in market. While aggregate capital targeted rose sharply amid the frenzied fundraising of 2022, up 56 per cent to USD342 billion by January 2023, it continued to surge by 43 per cent in the first six months of 2023. Preqin analysts believe managers are keen to secure investor capital, while a disconnect between investors’ commitment intentions and managers’ keenness to raise capital has emerged.
- Performance: Infrastructure assets performed well to the end of 2022, buoyed by confidence around the asset class following the impressive fundraising that year. Unrealised value increased by 24 per cent by the end of 2022, against an 11 per cent increase in dry powder, bringing uncommitted capital’s share of assets under management (AUM) to a new low of 27 per cent.
Alex Murray, VP, Head of Real Assets, Research Insights, at Preqin says:“The optimism in infrastructure from the first half of 2022, that underpinned a doubling of fundraising pace, makes the current fundraising slowdown all the more stark. Having said this, when delving deeper into interim closings, Preqin’s depth of fundraising coverage provides a leading indicator that investors are returning to the asset class. Where the deals market will head remains less certain – if real estate has set a precedent for infrastructure, managers with dry powder may do well hold out for better value assets in future quarters.”