Transportation Finance Report: 2014

Global investors put $33.6 billion into infrastructure investment funds in 2013, say Robert Poole, director of transportation policy at the Reason Foundation.

Infrastructure investment funds allow large investors to combine their resources to invest into infrastructure projects, whether “brownfield” projects (existing infrastructure projects that are being privatized) or “greenfield” projects (new infrastructure in need of financing).

– Last year, $33.6 billion was invested in infrastructure investment funds, the highest level of investment in the last five years.
– A survey from Probitas Partners in mid-2013 determined that 50 percent of all types of institutional investors have separate portfolios for infrastructure.
– Looking at the top 30 global infrastructure funds, in the last five years, these 30 funds alone have raised $148 billion. That equity would likely fund $592 billion worth of infrastructure projects.
– Most funds include a mix of brownfield and greenfield projects. Brownfield projects are low-risk, whereas greenfield projects are much riskier.

More than 34 percent of the capital providing equity for infrastructure projects comes from United States institutions, followed by Australia, Canada, Europe, Asia and South America. However, it is European companies that are operating the largest number of projects.

– Seven of the top 10 transportation firms are from Europe, one is from Australia and two are from China.
– A U.S. company is not ranked on the list of top infrastructure companies until spot 31.

Of the top 10 infrastructure funds currently in operation, two of them are pension funds, responsible for $13 billion of the $148 billion raised by the top 30 funds. The largest public pension funds often make direct investments in infrastructure projects, while smaller funds invest in an investment fund. For example, CalPERS — the largest public-sector pension fund in the United States — made a direct investment into London’s Gatwick airport in 2010.

There are also a growing number of infrastructure debt funds, which first began to appear in 2011.

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