infrastructureinvestor.
com
FOR THE WORLD’S INFRASTRUCTURE MARKETS
INFRASTRUCTURE
INVESTOR
30
infrastructure investor
infrastructure investor 30
analysis
Sachs, from 2nd last year to 17th this year, may be
Rise and rise of the attributed to the loss from its five-year total of the
$6.5 billion fund it closed in 2006. Nor is the trend
independent funds
we have identified likely to be arrested – 2007
and 2008 were years in which the bank funds
continued to raise large amounts of capital, but
they will disappear from the five-year qualifying
The evolution from the bank-affiliated fund model to period over the next couple of years.
the independent model continues apace in this year’s Of course, the point should be made
that very few firms have had it easy on the
II 30 ranking of the asset class’s 30 largest investors. fundraising trail in the post-crisis period – just
Meanwhile, pension fund appetite appears to be waning. because you’re an independent fund, it does
Andy Thomson reports not guarantee you the unwavering support
of the limited partner community in tough
Over the first two years in which we ran the Macquarie Bank and the now-defunct Babcock times like these.
Infrastructure Investor 30 (II 30) – our propri- & Brown, as well as US giants such as Goldman The difficulty of fundraising recently is
etary ranking of the world’s 30 largest investors Sachs and Morgan Stanley, were the industry’s highlighted by the fact that the total amount of
in the infrastructure asset class (see p.26 for our big beasts. five-year capital accounted for by the II 30 this
methodology) – a sharp battle has been fought But with the onset of the global economic year is $171.5 billion, compared with $183.1
between bank-affiliated funds and independent and financial crisis came a shift to more con- billion at the same time last year. But those
funds over the most dominant form of invest- servative financing techniques as well as struc- which do benefit from investor support will
ment in the asset class. In this, the third year, the tural and regulatory obstacles which have dis- soon rise up the rankings – witness Global
battle appears to have been decisively won by suaded or prevented banks from committing Infrastructure Partners’ advance from 13th
the independents. large amounts of risk capital. This has led to a place last year to 3rd this time as its second
In the first year of the II 30 in 2010, the diminishing supply of capital for the bank-affil- fund registered a first close on $3 billion fol-
bank-affiliated funds were just ahead, account- iated funds as well as the spinning out of many lowing on from the first fund’s $5.64 billion
ing for $48.6 billion of infrastructure capital of these funds’ management teams to form close in 2008. (A second closing for Fund II
raised over the qualifying five-year period, new, independent fund managers – witness on $5.5 billion was announced just after the
compared with $47.9 billion for independ- the emergence of Arcus Infrastructure Part- deadline for inclusion in this year’s ranking).
ent funds. Last year, we pondered whether a ners and SteelRiver Infrastructure Partners One outcome of this year’s results that may
changing of the guard was being witnessed as from Babcock & Brown, for example (both give some pause for thought is the lower total
the independents pulled slightly ahead, by the of which now feature in the II 30 ranking). contributed by pension funds. In last year’s
small margin of $54.9 billion to $54.3 billion. This year’s II 30 underlines that these ranking, the aggregate funding for infrastruc-
In 2012 – with the qualifying period for independent funds are now the recipients of ture set aside by pensions in the top 30 totalled
funds raised running from 1 January 2007 to the bulk of the capital being committed to the $53.9 billion – this time, the equivalent figure
30 April 2012 – the independent funds have infrastructure asset class. Moreover, this trend is $49.5 billion.
stretched further away from the bank-affiliated is only likely to be exacerbated in future rank- There is no doubt that some pensions are
funds, with $60.56 billion raised by the former ings as the infrastructure fundraising ‘boom a growing force. QIC, the Queensland public
and $54.69 billion by the latter. years’ (when the bank funds were in their pension manager, had risen from 22nd in the
pomp) continue to be removed from the 2010 ranking to ninth last year ($6.24 billion)
BENIGN FUNDRAISING rolling five-year qualification period. before making a further climb this year to sixth
The figures are interesting because they reflect With capital raised in 2006 being deducted ($6.88 billion). And Canada’s Ontario Teachers’
the evolution of the asset class. In the early days, from this year’s qualifying period, Macquarie Pension Plan, which ranked 11th last year on
it came to be dominated by the investment Infrastructure and Real Assets’ dominant posi- $5.81 billion, rises to seventh this year with
banks, which raised private equity-style funds tion at the top of the table has been scaled back $6.87 billion.
and applied private equity-style techniques to by a material margin – its total falling from $31.83
infrastructure assets. In the years prior to the col- billion last year to $23.72 billion (though it still SOBERING
lapse of Lehman Brothers, it was possible for the boasts around double the capital of closest rival However, at a time when governments around
banks to raise very large funds in what was a Brookfield Asset Management). Meanwhile, a the world are increasingly seeing pension
benign fundraising [Link] likes of Australia’s dramatic fall down the rankings for Goldman funds as a possible solution for the long-term
i n f r a s t r u c t u r e i n v e s t o r
infrastructure investor 30
funding gap for infrastructure (though admit- Questions will arise about whether this is the way of pension funds making the level of
tedly this tends to focus more on the debt due to a plateauing or declining interest in the commitment to the asset class that they would
need than the equity requirement), the overall asset class – which seems unlikely given the like.
decline in the availability of capital from the top enthusiasm generally expressed in surveys – or
pension funds is a sobering finding. whether there are structural issues standing in
THE INFRASTRUCTURE INVESTOR 30
Rank Since Name of investor Headquarters Five-year capital
2011 formed total ($bn)
1 Ø Macquarie Infrastructure and Real Assets Sydney 23.72
2 Ù Brookfield Asset Management Toronto 11.16
3 Ù Global Infrastructure Partners New York 8.64
4 Ú Canada Pension Plan Investment Board Toronto 8.41
5 Ø APG Asset Management Amsterdam 7.80
6 Ù QIC Brisbane 6.88
7 Ù Ontario Teachers Pension Plan Toronto 6.87
8 Ú Alinda Capital Partners Greenwich, Connecticut 5.90
9 Ù Industry Funds Management Melbourne 5.51
10 Ù ArcLight Capital Partners Boston 5.43
11 Ù OMERS Toronto 5.02
12 Ù Arcus Infrastructure Partners London 4.99
13 Ú Energy Capital Partners Short Hills, New Jersey 4.79
14 Ù RREEF Infrastructure London 4.35
15 Ù Highstar Capital New York 4.25
16 Ù Future Fund Melbourne 4.20
17 Ú Goldman Sachs New York 4.17
18 Ú La Caisse de Dépôt et placement du Québec Montreal 4.14
19 Ø Morgan Stanley New York 4.00
20 Ú JPMorgan Asset Management New York 3.90
21 Ù AMP Capital Sydney 3.83
22 Ù Universities Superannuation Scheme Liverpool 3.80
23 Ù British Columbia Investment Management Corporation Victoria, British Columbia 3.74
24 Ú SteelRiver Infrastructure Partners San Francisco 3.73
25 Ù Colonial First State Sydney 3.72
26 Ù UBS Global Asset Management London 3.60
27 Ú Citi Infrastructure Investors New York 3.40
28 Ú Energy Investors Funds San Francisco 3.06
29 Ú AXA Private Equity Paris 2.90
30= Ú Alberta Investment Management Corporation Edmonton, Alberta 2.80
30= Ù Kohlberg Kravis Roberts New York 2.80
Source: Infrastructure Investor
*All currencies were converted to US$ at the same time and same conversion rate **Ferrovial, which featured in the II 30 last year, this year declined to participate
infrastructure investor
infrastructure investor 30
BY THE NUMBERS
CAPITAL FORMED OVER THE LAST FIVE YEARS ($BN)
$0.0 $5.0 $10.0 $15.0 $20.0 $25.0
Macquarie Infrastructure and Real Assets 23.72
Brookfield Asset Management 11.16
Global Infrastructure Partners 8.64
Canada Pension Plan Investment Board 8.41
APG Asset Management 7.80
QIC 6.88
Ontario Teachers Pension Plan 6.87
Alinda Capital Partners 5.90
Industry Funds Management 5.51
ArcLight Capital Partners 5.43
OMERS 5.02
Arcus Infrastructure Partners 4.99
Energy Capital Partners 4.79
RREEF Infrastructure 4.35
Highstar Capital 4.25
Future Fund 4.20
Goldman Sachs 4.17
La Caisse de Dépôt et placement du Québec 4.14
Morgan Stanley 4.00
JPMorgan Asset Management 3.90
AMP Capital 3.83
Universities Superannuation Scheme 3.80
British Columbia Investment Management Corporation 3.74
SteelRiver Infrastructure Partners 3.73
Colonial First State 3.72
UBS Global Asset Management 3.60
Citi Infrastructure Investors 3.40
Energy Investors Funds 3.06
AXA Private Equity 2.90
Alberta Investment Management Corporation 2.80
Kohlberg Kravis Roberts 2.80
Source: Infrastructure Investor, 2012
TOP 10 VS. NEXT 20 WHO THEY ARE
The top 10 firms in the II30 account for almost 53% of the total in 2012 Fund managers account for more than two-thirds of the II30 total
$120
n Fund Managers, 69%
Capital formed over the last fiv years ($bn)
$100
$80
n Sovereign wealth funds, 2%
$60
$90.3 $101.3 $86.7
$40
$81.2 $81.2 $53.8
$20 n Pensions, 29%
$0
Top 10 Next 20
n 2012 n 2011 n 2010
Source: Infrastructure Investor, 2012 Source: Infrastructure Investor, 2012
infrastructure investor
infrastructure investor 30
TOTAL CAPITAL FORMED BY INSTITUTION TYPE ($bn)
60
50
40
30 54.90 60.56
$bn
54.30 53.80 54.69 49.46
48.60 47.90 n Bank-affiliated funds
20
32.00 n Independent fund managers
10
n Pension funds
0
2010 2011 2012
THE BIGGEST PENSIONS IN INFRASTRUCTURE
Rank Fund Manager Headquarters 5-year fundraising total ($bn)
4 Canada Pension Plan Investment Board Toronto 8.41
5 APG Asset Management Amsterdam 7.80
6 QIC Brisbane 6.88
7 Ontario Teachers Pension Plan Toronto 6.87
11 OMERS Toronto 5.02
TOP 5 CITIES TOP 5 COUNTRIES
Capital centre 5-year fundraising No. of Capital centre 5-year fundraising No. of
total ($bn) institutions total ($bn) institutions
Sydney 31.27 3 USA 54.07 12
New York 31.16 7 Australia 47.86 6
Toronto 20.30 4 Canada 39.34 7
London 12.94 3 UK 13.40 4
San Francisco 6.79 2 The Netherlands 7.80 1
France 2.90 1
2011’S
LAST LARGEST
YEAR’S II 3010
TOP TEN
Rank Name of investor Headquarters Five-year capital formed
total ($bn)
1 Macquarie Infrastructure and Real Assets Sydney 31.83
2 Goldman Sachs New York 10.72
3 Canada Pension Plan Investment Board Toronto 9.97
4 Ferrovial Madrid 9.42
5 APG Asset Management Amsterdam 7.43
6 Alinda Capital Partners Greenwich, CT 7.10
7 Energy Capital Partners Short Hills, NJ 7.04
8 Brookfield Asset Management Toronto 6.26
9 QIC Brisbane 6.24
10 La Caisse de dépôt et placement du Québec Montréal 5.92
Source: Infrastructure Investor, 2012
infrastructure investor
infrastructure investor 30
methodology
The II 30: What qualifies
and what does not
In the following two pages, we explain how we put together the II 30
When we set out to create the Infrastructure Investor 30 rank- WHAT IS THE INFRASTRUCTURE INVESTOR 30?
ing two years ago, we wanted it to be truly representative of The Infrastructure Investor 30 is a ranking of the 30 largest
the asset class. infrastructure investors globally by size. It follows on the
Hence, we made our job more complex than it might have success of sister magazine Private Equity International’s simi-
been by holding the door open for possible inclusion to the lar ranking called the PEI 300, which ranks the largest 300
likes of pension funds, developers and sovereign wealth funds private equity firms.
as well as just general partners (GPs). Not all these groups
commit to the asset class in quite the same way, so it means HOW WE DETERMINE THE RANKINGS
we have had to be careful in making sure that we arrived at In coming up with our “II 30 Five-Year Capital Created Total,”
an appropriate methodology for each of them. upon which the Infrastructure Investor 30 rankings are based,
We also wanted the ranking to reflect investment in we rank the most accurate figure available from each inves-
infrastructure. This sounds obvious, but infrastructure has tor in answer to the question – “How much infrastructure
characteristics that overlap with other asset classes and the direct-investment capital has your firm formed since 1 January
definition of infrastructure – as has been well documented in 2007?” – defined as follows:
these pages – is very much open to discussion. We wanted to
ensure that the overlap with private equity and other invest- • “Infrastructure”: The definition of infrastructure investing,
ment areas was limited as much as possible. for the purposes of the Infrastructure Investor 30, means com-
We were also keen to ensure that our measurement of size mitting equity capital toward tangible, physical assets, whether
would take into account a firm’s heft going forward as well as existing (brownfield) or development-phase (greenfield) that
that indicated by the scope of its past fundraising successes. are expected to exhibit stable, predictable cash flows over a
In the end we believe that we can indeed boast a propri- long-term investment horizon. Investors need not seek to own
etary methodology that encompasses all of these considera- the assets in perpetuity and may exit them, realising a capital
tions. Below, we set out exactly how we draw up our ranking. gain and generating an internal rate of return for themselves
or their end-investors. However, they must primarily dedicate
THE METHODOLOGY their investment programmes toward the pursuit of assets
Rankings are based on the answer to the question “How and projects that exhibit cash flow stability and predictability
much infrastructure direct-investment capital has your firm and cannot be counted if they’ve made large one-off invest-
formed since 1 January 2007?” and counts: ments in the asset class on an opportunistic basis. There will
1. equity capital raised by infrastructure funds; certainly be grey areas with regard to these parameters, but
2. infrastructure fund commitments and direct capital Infrastructure Investor will take pains to ensure that the capital
invested in infrastructure assets by pension plans; counted for the purposes of the ranking will fall within our
3. equity capital invested in infrastructure projects and definition of infrastructure to the furthest extent possible.
concessions by infrastructure developers.
Below is an extract from our definition of the “new infra-
All of the above count toward the rankings if they were made structure” (which can be found on the last inside page of all
between 1 January 2007 and 30 April 2012 (inclusive), the issues of Infrastructure Investor):
cut-off date before the June 2012 issue of Infrastructure Inves-
tor magazine went to press. “Infrastructure is the term that covers the man-made facilities
that enable any economy to operate. It can be segmented
Below are the rules and definitions used to create the Infra- further into three broad types: transportation (e.g., railways,
structure Investor 30 ranking. roads and airports), utilities (e.g., energy generation and
infrastructure investor
infrastructure investor 30
distribution, water and waste processing and telecommunica- the in-house expertise to make direct investments in infra-
tions) and social infrastructure (e.g., schools, hospitals and structure assets. Many others have carved out infrastructure
state housing)…” investment allocations that may include direct or indirect
investments. For the purposes of our rankings, a pension
You will see that the emphasis is on the assets themselves plan counts as an infrastructure investor if it has allocated
rather than on associated services and technology. In our five- capital to listed and unlisted infrastructure funds and/or
year total, only capital allocated to infrastructure is included, deployed capital directly in infrastructure assets on its own
as defined above. Where the investments are made in what (not including related real asset strategies).
may be termed a “grey area” between infrastructure and pri-
vate equity, we reserve the right to make the final judgement 2) Private investment funds: Limited partnerships, pooled
based on applicability according to our definition. investment vehicles and other investment structures that
raise capital from outside parties for the purposes of invest-
• “Direct-investment capital”: We recognise that different play- ing capital in infrastructure count as infrastructure investors.
ers in the asset class will deploy capital in different ways. The Committed capital such funds have attracted in the last five
end goal, though, is the same: capital flows from investors into years count as infrastructure investors. Listed investment
infrastructure assets, whether it’s a concession backed by a vehicles, such as externally-managed funds that raise capital
developer, an infrastructure business bought by a fund man- on a stock exchange and then use that capital to make infra-
ager or a utility jointly purchased by a group of pensions and structure acquisitions, also count as infrastructure investors.
infrastructure funds. So we define direct-investment capital as: Only capital raised in an IPO or in a follow-on offering will
• Equity raised by infrastructure fund managers, whether count toward a listed fund’s ranking. Where one investor
listed (via IPO or follow-on offering) or unlisted (private manages both listed and unlisted infrastructure funds, it is
placement); ok to combine the two into the firm’s total five-year capital
• Equity committed to infrastructure funds by pensions created figure.
or directly invested in infrastructure by the pensions
themselves; 3) Infrastructure developers: Companies, whether privately
• Equity invested in infrastructure concessions or projects held or listed, that actively invest their balance sheet capital in
by infrastructure developers. infrastructure projects via government-sponsored infrastruc-
ture investment initiatives such as the UK’s Private Finance
• “Formed”: This means that the equity capital was definitively Initiative (PFI) scheme, count as infrastructure investors. As
committed to an infrastructure fund or directly invested in many companies that participate in these types of projects
an infrastructure project, concession or business between 1 are global conglomerates with various subsidiaries and invest-
January 2007 and 30 April 2012. By “definitively committed”, ment arms, only capital deployed toward infrastructure, as
we mean that the fund commitment has been signed (not defined above, count toward the ranking. For example, equity
a soft circle commitment) or that the direct investment has capital committed toward PFI concessions over the last five
reached financial close, not that it has been agreed to or years would count, whereas the acquisition of a subsidiary
reached commercial close. construction company would not.
WHO COUNTS AS AN INFRASTRUCTURE INVESTOR?
Our rankings focus on three primary sources of equity capital
for infrastructure investing: pension plans, private investment
funds and infrastructure developers, defined as follows:
1) Pension plans: Over the last two decades, many pension
plans, primarily in Canada and Australia, have developed
PEI London PEI New York PEI Hong Kong
Sycamore House 3 East 28th Street 14/F, Onfem Tower
Sycamore Street 7th Floor 29 Wyndham Street
London New York Central
EC1Y 0SG NY 10016 Hong Kong
