investing is ruled by a small number of investors and managers able to
commit $1 billion or more to the asset class, according to Preqin.
Preqin data has shown the 69
institutional investors comprising the “$1 billion club” have become the “dominant
market participants,” allocating 7% of their total portfolios to infrastructure
on average. Investors with smaller commitments, meanwhile, typically invested
These larger investors—which
included a high proportion of public pension and Canadian investors—were more likely
to have separate allocations to the asset class, with 69% reporting separate
infrastructure portfolios compared to 34% of smaller investors.
“The increased resources, both
human and financial, that the members of the $1 billion club of investors can
bring to bear on the industry allow them to take a more tailored approach to
the infrastructure market,” said Tom Carr, head of real assets products at
Preqin said higher levels of
resources and experience allowed $1 billion club members “greater access to the
market through direct investments.” More than three-quarters (82%) of these
investors invested directly, compared to 31% of non-members.
“The high proportion of
investors choosing to directly invest in projects is indicative of their size,
and their greater experience allows them to rely less on the expertise of fund
managers to identify attractive investment opportunities,” Carr said.
As for those managers, Preqin
tracked 84 infrastructure firms globally that have raised more than $1 billion
in the last 10 years. These firms collectively accounted for $320 billion, or
85% of investor commitments since 2006.
Of those 84 managers, just six
raised more than $10 billion. The top six combined represented $108 billion, or
29% of capital raised over the decade—suggesting an “increasing stratification
“It is likely that $1 billion
club investors will see further growth in their number over the coming years,
as many large investors which do not currently qualify are below their target
allocations to the asset class,” Carr said. “As more investors join this group
of the largest infrastructure investors, its members are increasingly becoming
dominant participants in the infrastructure market.
on the Infrastructure Big Boys & Infrastructure’s
Brave New World