Macquarie tops new ranking of infrastructure investors

Investment bank-affiliated funds have raised at least $48.6 billion in the past five years for infrastructure, according to The Infrastructure Investor 30, a global ranking of the largest infrastructure direct-investment programmes released today by Infrastructure Investor magazine.

The full list is available here.

The ranking, which is based on a proprietary methodology developed by Infrastructure Investor, challenges the common assertion that independent fund managers are likely to enjoy more fundraising success than captive funds managed by investment banks or private equity firms. Non-bank affiliated funds raised $47.9 billion, though several independent fund managers also figure prominently in the ranking.

Together, the 30 largest infrastructure investment programmes in the world formed $140.5 billion in investment capital over the past five years.

Macquarie Group, the Sydney-based investment bank best known for its infrastructure investment activities topped the ranking with $30.6 billion in direct-investment capital formed for infrastructure. Approximately $8.5 billion of that was raised across Macquarie’s listed funds, $21.7 billion across its unlisted funds, and about $500 million in direct balance sheet investments by the firm over the last five years.

Goldman Sachs, the New York-based investment bank, came in a distant second, at $9.1 billion. In April, Goldman Sachs Principle Invesment Area topped the list of the world’s largest private equity firms, complied by sister magazine Private Equity International (see related story here).

Macquarie and Goldman’s success in the rankings come at a time when both firms missed fundraising targets for their latest US-based infrastructure funds. Macquarie Infrastructure Partners II, which entered the market in 2008, reached a final close on $1.5 billion against an initial target of $6 billion, while Goldman Sachs Infrastructure Partners II, which entered the market in a similar time frame, cleared $3.1 billion in final commitments against an initial target of $7.5 billion.

Many market participants are also publicly questioning the value of being tied to a parent company such as an investment bank or a private equity firm. Last year, an investor survey by placement agent Probitas Partners found that 60 percent of experienced investors in the asset class prefer independent managers and predicted that the market is likely to see more independent managers in response to this preference.

Chris Beale, the managing partner of the third-largest investor in the ranking, New York-based infrastructure fund manager Alinda Capital Partners, views his firm’s independence as the key factor that allowed it to raise $7 billion in the last five years (see related story here).

All told, non-investment bank affiliated fund managers like Alinda raised $47.9 billion of capital for infrastructure – $700 million less than the bank-sponsored funds and about one-third of the $140.5 total for The Infrastructure Investor 30. But besides Alinda, only two other independent fund managers, Global Infrastructure Partners, at $5.6 billion, and Highstar Capital, at $4.3 billion, made it into the top ten, at 8th place and 10 place, respectively.

Several veteran pension investors, including Toronto-based Ontario Municipal Employees Retirement System, at $6.2 billion, and Caisse de Depot et Placement du Quebec, at $6.1 billion, also feature prominently in the ranking, at 5th and 6th place, respectively. All together, pensions accounted for $32 billion, or about 23 percent, of the total infrastructure direct-investment capital created by the Infrastructure Investor 30.

Infrastructure developers, which often take minority equity stakes in the projects they develop, fared less prominently in the ranking. All three of the developers to make the list – conglomerate Ferrovial of Spain, UK’s Balfour Beatty and Madrid-based ACS – finished in the bottom half, with Ferrovial leading the pack with $2.9 billion, earning 16th place in the ranking.

The Infrastructure Investor 30 was created using a proprietary methodology that takes into account the total direct-investment equity created by an investor for infrastructure in the last five years. The methodology was created to measure the size of the three major investor types in the asset class, fund managers, pension plans and infrastructure developers, in an apples-to-apples manner.

To read more about the ranking’s methodology, click here.