Infra PE funds rise more than three-fold to $12.6 bn: report

Infrastructure-focussed private equity funds globally witnessed over three-fold surge in the first half of this year, suggesting an improved investor sentiment towards what were the under-performer funds last year, reveals a survey.

The global survey of 450 unlisted PE funds by research firm Preqin has found that during January-June period, 11 Infra funds made aggregate commitments of $12.6 billion.

This is in contrast to $3.5 billion raised by seven infra-vehicles in the same period last year.

"This suggests improved investor sentiment towards unlisted infrastructure funds following the financial crisis, with 2010 fund raising already exceeding the total raised in 2009 by $5 billion," the report noted.

In 2009, aggregate fund raising was $7.8 billion, which was 83 per cent lower from the USD 44.8 billion raised in the earlier two years.

Unlisted infrastructure funds are generally financial vehicles, usually with a limited partnership-type structure, that are not listed on stock markets. They invest in infrastructure assets, including infrastructure- related companies.

Although the performance of unlisted infrastructure funds has improved slightly in the first half of 2010, they are nowhere near the record levels before the onset of global financial crisis.

According to the data available with Preqin, 24 infrastructure funds mopped up $37.7 billion in 2007, a record breaking amount followed by $36.6 billion raised by 35 infrastructure funds in 2008.

From January 2009-till date, 21 more infrastructure funds have entered the market, taking the tally to 105, seeking an aggregate investment of $80.8 billion in total. This implies that poor fund raising conditions have not deterred fund managers from launching infrastructure funds.

"Recent fund raising figures and positive investor sentiment towards infrastructure suggest that commitments to the asset class from investors will continue to strengthen in the near future," the report said.

However, Preqin added that fund raising conditions may remain challenging throughout 2010.

The survey found that core infrastructure assets including energy, utilities, transportation and telecom continued to dominate the first half of 2010 PE-Infra deal activity.