Consolidation at the top among infrastructure funds illustrate current trends in industry

The latest development of BlackRock acquiring Global Global Infrastructure Partners (GIP), potentially creating an infrastructure fund manager with more than US$150bn in assets under management illustrates 2 interesting trends in an increasingly mature industry:

  • the increasing attractivity of Infrastructure for large asset managers, as highlighted by Laurence D Fink, BlackRock Chairman and CEO: “Infrastructure is one of the most exciting long-term investment opportunities, as a number of structural shifts re-shape the global economy,”, this assessment echoing the persistent infrastructure financing gap, itself due to a global need for infrastructure combined with high public debt and deficits constraining government spending .
  • and the tendency to acquire and regroup existing players in order to reach a bigger, critical size so as to create comprehensive global infrastructure franchises (“Mega-funds”) and provide platforms for diversified, large-scale sourcing to support deal flow and co-investment opportunities for clients .

Neveretheless, we believe there is still a case for smaller, thematic infrastructure funds remain, for instance in Energy transition , as supported by our latest Energy transition: Implications for Infrastructure investors report, which argues that it makes sense to have specialized energy transition strategies/platforms alongside generic infrastructure strategies.