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Jun 20, 2023 140 likes •250 views

FUNDRAISING IN 10 SLIDES In partnership with bfinance Welcome to the golden age of infrastructure fundraising Click here to read more A record year... With three months left, fundraising is already ahead of last year, making 2018 the

SLIDE 1

the golden age

FUNDRAISING IN 10 SLIDES

Welcome to

f infrastructure fundraising

In partnership with

bfinance

SLIDE 2 10 20 30 40 50 60 70 16 31 47 63 79 94 110 2011 2012 2013 2014 2015 2016 2017 YTD 2018 Capital raised ($bn) Number of funds closed Capital raised ($bn) Number of funds closed

With three months left, fundraising is already ahead of last year, making 2018 the biggest year for the asset class

A record year...

Source: Infrastructure Investor

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In terms of the concentration

f capital being

sought, it’s quite unprecedented

James Wardlaw, head of infrastructure, Campbell Lutyens

SLIDE 3

$60bn bonanza

If all these five funds hit a final close next year they will have raised as much as 88 funds did in 2014.

Quick close?

Rumour has it GIP's fourth flagship fund is due to close in early 2019, driven in part by a strong re-up rate from existing investors.

Crossing the pond

French fund manager Antin is said to be eyeing more investments in North America, as its latest vehicle is set to grow in size by 38%.

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2014 2019 5 10 15 20 25 30 35 40 45 50 55 60 Capital raised ($bn) Brookfield Infrastructure Fund IV Global Infrastructure Partners IV EQT Infrastructure IV Antin Infrastructure IV Ardian Infrastructure IV Total Source: Infrastructure Investor (2019 values are an estimate only)

There's a decent chance next year will end up at $100bn raised, considering some of the market's biggest names are back on the fundraising trail

... but 2019 threatens to be even bigger

Five of the biggest potential fund closes in 2019

SLIDE 4 2 4 6 8 10 12 3 6 8 11 14 17 2013 2014 2015 2016 2017 YTD 2018 Capital raised ($bn) Number of funds closed Capital raised ($bn) Number of funds closed

Infrastructure debt funds have collected $43bn globally since 2013, peaking at more than $12bn in 2015

Has debt fundraising peaked?

Source: Infrastructure Investor

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Subordinated debt is catching investors' attention, particularly investors that do not have liability-matching requirements

Anish Butani, director, private markets, bfinance

SLIDE 5 $0bn $5bn $10bn $15bn $20bn $25bn $30bn $35bn $40bn $45bn $50bn $55bn

North America continues to lead by regionally dedicated funds in market, but it was Asia that captured the attention of one

f the largest vehicles closed this year, the Macquarie Asia Infrastructure Fund II

No Trump infra plan? No problem

Source: Infrastructure Investor

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Funds in market

KKR Global Infrastructure Investors III $7.4bn Stonepeak Infrastructure Fund III $7.2bn ISQ Global Infrastructure Fund II $7bn Copenhagen Infrastructure Partners III $4.1bn Macquarie Asia Infrastructure Fund II $3.3bn Macquarie Super Core Infrastructure Fund $2.93bn Partners Group Direct Infrastructure 2016 $2.58bn Infracapital Partners III $2.5bn InfraVia European Fund IV $2.32bn LS Power Equity Partners IV $2.25bn Size

Top 10 funds closed YTD

Source: Infrastructure Investor

SLIDE 6 22 20 18 16 14 12 10 8 6 4 2 Core/Core+ Core+ Value-add 0.9 7 14 1.4 7.5 19 1.5 8 18.6 Mean (%) Management fee Hurdle Carry

Fee data from bfinance on 50 managers in market since 2016 shows value-add strategies are the costliest, with core/core+ offering the cheapest entry point to the asset class

How much does an infra strategy cost?

Source: bfinance (sample size: 42 funds; 6 out of 8 core managers charge carry)

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At a strategic level, investors are very hungry to allocate to the asset class. We are very much in a manager’s market as far as fees are concerned

Anish Butani, director, private markets, bfinance

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Newcomers to the asset class might find these structures appealing. But while they seem cheaper, investors should bear in mind the impact of underlying management and performance fees on overall returns when allocating

What about funds of funds?

Source: bfinance (sample size: 8 funds)

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Source: bfinance (sample size: 8 funds)

Vehicle fees

4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 Base fee Underlying fees Total estimated fees (inc. fees on fees) 0.54 2 3.5 Mean (%)

Overall fees

Management fee Hurdle Carry 1 2 3 4 5 6 7 8 9 10 11 0.54 7.13 9.75 Mean (%)

SLIDE 8

Even established managers charge fees on committed capital, underlining we are in a seller's market, while catch-up is still private-equity like

Sticky terms

Source: bfinance (sample size: 50 funds)

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Source: bfinance (sample size: 50 funds)

Fees on committed capital

100 90 80 70 60 50 40 30 20 10 Core/Core+ Core+ Value-add FoFs 67 82 70.5 91 Mean (%)

Catch-up

Charges fee 72% No fee 28%

SLIDE 9 Core/core+ Core+ Value-add 5 10 15 20 25 30 10 8.5 12.8 10.7 17.3 13.5 Mean (%)

When all expenses are considered, fee leakage shows costs that are not always factored in to the gross-to-net IRR spread

Mind the cost build-up

Source: bfinance (sample size: 42 funds)

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Leakage in core funds can be high as a proportion of gross IRR. It’s not uncommon to see core managers charge an all-in expense ratio of 2% – that’s 20%

f returns on

a fund targeting 10% gross

Anish Butani, director, private markets, bfinance 5.5 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 Core/core+ Core+ Value-add 1.5 3.3 5.1 Mean (%) Source: bfinance (sample size: 42 funds)

Gross & net IRR Fee leakage

SLIDE 10

Bruno Alves Senior Editor Infrastructure Investor bruno.a@peimedia.com +44 (0)207 167 2031

This report was compiled from data collected for Infrastructure Investor's In Focus: Fundraising published in October 2018.

Design: Miriam Vysna In partnership with

bfinance

Patrick O'Donnell Production Editor Infrastructure Investor patrick.o@peimedia.com +44 20 566 5465