PE investments in infrastructure set to pick up

After a lull, private equity investments in the infrastructure sector are likely to look up again by the end of this year and the reserves available with the fund houses are expected to touch $100 billion by 2012.

According to a report by the global research firm Preqin, investor interest in the asset class would recover by the end of 2009 and start to make up the current deficit. “In 2010-2011, we predict that infrastructure fund raising will start seeing the sort of fund raising activity which it enjoyed pre-2009.

“We predict that infrastructure dry powder (a term used to denote capital available for deals) levels will reach a historic $100 billion by 2012,” Preqin said in its report titled Infrastructure Spotlight.

In the first half of 2009, three unlisted PE infrastructure funds mopped up $3.5 billion and all the fund closures came in the first quarter. The report added that as of June 2009, unlisted PE funds investing in infrastructure space were sitting on a reserve of a record $71.5 billion, denoting a consistent increase since 2003.

An unlisted infrastructure fund generally means a vehicle, usually with a limited partnership-type structure, that is not listed on a stock market. The fund invests in infrastructure assets and may also invest in infrastructure- related companies.