The newly released 2015 Preqin Global Infrastructure Report features exclusive fund manager survey results, made available this week via a special complimentary report. The report provides insight into the future investment activity of infrastructure fund managers and their views on the current market.
Infrastructure fund managers appear to be bullish regarding the amount of capital they intend to commit to the asset class in the next 12 months, with 65% of managers surveyed by Preqin planning to deploy more capital in the asset class in 2015 than they did in 2014, and a considerable 27% planning to invest significantly more capital. Just 11% of managers plan to invest less capital in infrastructure assets in the next year.
The increasing availability of financing for infrastructure investments plays an important part in managers’ future plans for investment, with 56% of surveyed fund managers stating that the availability of debt is better than 12 months ago, and just 4% stating that it is worse. The overall consensus among fund managers appears to be that banks will provide the majority of their financing in 2015, with 68% of respondents stating so. Twenty-seven percent of respondents believe that institutional investors will provide the majority of debt financing, with a further 47% stating that these lenders will provide a small amount of financing. The infrastructure debt fund market has grown in recent years and, although it remains in its infancy, more than two-thirds of respondents expect to use debt funds as a source of capital to some extent in 2015, though none expect them to provide all funding.
Competition to Deploy Capital
Increasing appetite for the infrastructure asset class and a much improved debt market is leading to a much more competitive landscape. A sizeable 60% of fund managers believe competition for assets has increased over the past 12 months, with one stating that “competition is severe”; no fund managers responded that competition had decreased. In particular, 37% of managers believe they are competing more frequently with institutional investors for assets as more institutions look to access the asset class directly, and 30% believe they are competing more frequently with trade or strategic investors. Competition between managers is also strong, with a quarter of fund managers stating that there is more competition from this area. A consequence of the growing competition is that asset valuations have increased considerably, and 44% of infrastructure fund managers believe that it is more difficult to source attractive investment opportunities than it was a year ago, while just 10% believe it is easier.
Click here to read the full report, covering investor appetite for infrastructure and the impact of regulatory change.