GLOBAL – Pension funds worldwide have an "overwhelmingly positive" outlook on infrastructure, and more than 60% are now planning to increase investment in such projects over the coming 12 months, a new survey shows.
According to a study by Preqin, interest expressed by public and private sector pension funds indicates strong potential for growth for the sector, which has already surged in recent months.
Preqin found that infrastructure funds closed in 2013 had already raised an aggregate of $17bn (€12.6bn) in capital commitments, a 55% increase compared with the $11bn raised over the same period last year.
Additionally, 58% of investors surveyed were planning to set aside a larger percentage of their total assets for investment in the asset class over the longer term.
Preqin said: "This is a significantly higher proportion than is seen among investors in private equity, hedge funds or real estate, with 34%, 23% and 40% of investors in these asset classes, respectively, expecting to increase their allocations to their respective asset class in the longer term."
Elliot Bradbrook, manager of infrastructure data, said: "Investors are increasingly satisfied with the performance of their infrastructure portfolios and are looking to commit more capital to the asset class in the future.
"We are already seeing this appetite from pension funds and other institutional investors translate into increased fundraising for unlisted infrastructure funds, and we expect to see further growth in the amount of institutional capital being put to work in infrastructure development in the coming months and years."
More than 90% of respondents to Preqin's survey feel their infrastructure fund investments have met or exceeded expectations over the past 12 months, and 47% plan to invest at least $100m in the asset class over the same period.
However, new regulatory frameworks coming in Europe and the US represent a major source of concern for investors, who remain uncertain about regulations introduced in 2011-13, according to Preqin.
IPE and Stirling Capital Partners are co-hosting a conference, Infrastructure for Pension Funds and Other Capital Owners, to take place on 2 October in London. For more information, click here.
