European infrastructure projects hot among investors- report

December 1
10:38 PM 2013

A report on the Financial Times revealed that European infrastructure projects were sought after by investors. Citing data from Preqin, an alternative investment firm, the report said 19 infrastructure funds have raised EUR 9.1 billion when they closed this year, for European engineering projects. Two years ago, there were only 11 infrastructure funds that closed which raised only a total of EUR 2.6 billion.

Moreover, over half of the funds closed this year were able to meet or go over their expected targets. On the average, the funds gathered EUR 762 million. This compares with the USD 263 million average gathered last year. Preqin also said that there are still 58 infrastructure funds focused on Europe that are still raising funds. They are aiming for new capital worth over EUR 26.1 billion.

Preqin added that the interest of institutional investors in infrastructure projects will continue to grow. Almost half of all institutional investors geared for infrastructure investments still do not have sufficient allocations for the asset class.

Elliot Bradbrook, the head of infrastructure data of Preqin said there has been dramatic growth in Europe as far as fundraising for unlisted infrastructure is concerned. He added, "There is clearly significant investor appetite for European infrastructure exposure and many Europe-based institutional investors expect to put a considerable amount of capital to work in the coming months . . . it is clear that there is considerable investor demand for infrastructure exposure and those firms that are able to differentiate themselves from the competition can be very successful in the fundraising market."

However, the funds are finding it a challenge to put the funds to work even with the high demand for European infrastructure. In the past 11 months, the funds have only invested in 133 projects compared with the 198 projects it backed last year. The transactions done involved smaller amounts, with just 10% of all deals in Europe exceeding EUR 500 million.

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