With bleak economic news continuing to cast a cloud, infrastructure funds will spy a silver lining as a new survey points to an increasing appetite for the asset class and a growing number of dedicated allocations.
Should investors be so eager to apply thumb-screws to GPs on fund economics?
Caisse de depot et placement du Quebec has spent €210m increasing its stake in Fluxys to 20%. The investment will help fund Fluxys’ acquisition of two European gas transport pipelines for €858m.
The Multilateral Investment Guarantee Agency, an arm of the World Bank, provided a record $2.1bn of new investment guarantees for projects in developing countries in the fiscal year to the end of June 2011 – a 43% increase on the previous year.
The Swiss private markets manager has invested in Sorgenia France, a French wind energy joint venture established by US alternative assets firm Kohlberg Kravis Roberts and Italian energy company Sorgenia in June.
Limited partners, especially pension funds and life insurers, will readily tell you that they like infrastructure because of its long-term, stable cash-flows. So why do they prefer infrastructure funds with 10- to 12-year life-cycles?
Partners Group, the Switzerland-based private markets investment manager, has continued its international expansion with the launch of a new office in Paris. The firm, which now has 15 offices in total around the world, has opened five of these offices since the beginning of last year.
The Merseyside Pension Fund, ‘the fifth-largest local authority pension fund in the UK’, has made the commitment as part of its growing infrastructure portfolio. The pension has about £60m invested in the asset class, but wants to raise its total infrastructure portfolio to £100m.
A new report commissioned by the Association of Superannuation Funds of Australia says that superannuation funds’ investments in infrastructure could more than quadruple from the current A$45bn to A$200bn by 2025 ‘on the basis of likely asset allocations’.
The consortium has yet to be finalised and could still include other members. Teams led by Ferrovial and Global Infrastructure Partners are also said to be coalescing to bid for the privatisation of airports in Madrid and Barcelona. The government is targeting an upfront payment of €5.3bn for the two airports.
Saigon Asset Management has announced plans to establish and raise capital for a new fund that will invest in thermal and hydropower projects and companies in Vietnam, Cambodia and Laos. It is expecting to raise at least $300m.
The Canadian pension invested C$9.5bn in infrastructure in the quarter to June 30 2011, a close to 36% increase on the C$6.1bn it invested in the asset class during the previous comparable period. Infrastructure now amounts to 6.2% of the pension’s C$153bn portfolio.
The Swiss private markets investor has acquired a stake in Madrileña Red de Gas, the Spanish gas distribution company that was bought by Morgan Stanley Infrastructure Partners and Galp Energia in an €800m deal last year.
As more institutional investors buy infrastructure assets directly, they will be hoping that their risk/return calculations pay off.
The non-binding proposal from the Hong Kong-based investor values Northumbrian Water at 465 pence in cash for share. Cheung Kong is now conducting due diligence, but it must sell another UK utility it owns, Cambridge Water, before tabling a firm offer for Northumbrian Water.