Fundraising by infrastructure funds appears to be recovering after a soft start to the year, with third-quarter interim closed capital raised reaching $54.5bn (€52bn), according to data analytics firm Preqin.
This figure was well above the quarterly average of $35.4bn between 2016 and 2022, according to the firm’s third-quarter infrastructure update.
“The four-quarter rolling average suggests the fundraising market is returning to growth, albeit still below the long-term uptrend,” wrote Alex Murray, head of real assets research insight at Preqin.
“By the second quarter interim aggregate capital raised was looking up, with the four-quarter rolling average reaching $42bn by the end of September 2023.”
However, the picture remained subdued when looking at final close of funds. In the third quarter just $5.1bn was raised in final closes, bringing the year-to-year aggregate to just $20bn, against a quarterly average value of $31.1bn between 2016 and 2022.
The firm said this implied some investors had been feeling the dominator effect and that capital was not rotating because of delayed exits.
Murray said: “After a bumper 2022, the slowdown in infrastructure fundraising in 2023 has so far caught many by surprise. This pullback was sharper than those seen in other alternative asset classes.
“However, looking at funds’ interim closes data reveals an uptick in the third quarter of this year to $55bn, this suggests the market may be returning to a more normal pace, buoyed by anticipation in reaching the end of a rapid credit tightening cycle.”
Funds in the market had continued to surge reaching 577 funds targetting $532.7bn as of October 2023 – up 27% and 48% respectively.
Tougher times, notwithstanding, infrastructure fund managers were holding an increasing amount of dry powder - totalling $353bn.
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