Global infra PE investment down 73% in Jan-Mar

Private equity (PE) investment in infrastructure companies stood at $600 million worldwide in the January-March period, a decline of 73 per cent vis-a-vis the previous quarter on account of a lack of long-term debt availability and refinancing issues, says a report.

However, fundraising levels are expected to pick up throughout the year, according to research firm Preqin. According to the report, PE firms pumped $600 million into infrastructure-related companies during the first quarter of the 2011 calendar year, the lowest level since the second quarter of 2004.

In comparison, these companies garnered a total of $2.2 billion in the October-December period of 2010, which translates into a 73 per cent drop during the period under review. “Deal flow continues to be hindered by a lack of long-term debt availability and refinancing issues for existing assets. Future deal flow will rely on resolution of these issues in order to allow fund managers to source and execute profitable transactions,” Preqin Manager (infrastructure data) Elliot Bradbrook said.

This was the second straight quarter that saw a decline in fund mop-up activity in the infrastructure industry. However, fundraising activities in the sector are expected to pick up throughout the year. “We, therefore, expect fundraising levels to pick up throughout the year,” Bradbrook added. Looking ahead, nearly two-thirds of respondents to a Preqin survey plan to invest in the infrastructure asset class over the following 12 months, showing a healthy appetite for infrastructure funds.

However, the report noted that only fund managers that offer stand-out opportunities will be successful in fundraising. There are a total of 131 funds targeting an aggregate total of $92.1 billion worth of commitments during the second quarter. This represents the third successive quarterly increase in both the number of funds in the market and the aggregate capital being sought.