PRINT THIS PAGE The return of infrastructure funds21/02/2007. Source: Asia Private Equity Review (APER). 
Infrastructure plays are in vogue after an absence of more than six years, says the APER. Since the beginning of the year, a number of infrastructure funds have been launched. In 1994, when American International Group raised its first Asian infrastructure fund, the AIG Infrastructure Fund, which received US$1.08 billion in commitments, it was a stunning achievement.
Before the end of the last decade, however, the then swelling pool of infrastructure fund managers had to put on a new cloak when investors lost interest in infrastructure-related businesses. But infrastructure funds are making a come back and, since the beginning of the year, a number of infrastructure funds have been launched.
In January, Goldman Sachs announced the final closing of its first infrastructure fund, at US$6.5 billion. The sheer size of this fund, which invests largely in North America, has set the stage for a new era of infrastructure funds. In the same month, KFM Diversified Infrastructure and Logistics Fund (‘Kaplan DI&L Fund’) became the first infrastructure investment vehicle in the year that was listed on the Australian Stock Exchange. To be managed by Sydney-based Kaplan Funds Management Pty. Ltd., the A$200 million (US$154.4 million) Kaplan DI&L Fund invests in both listed and unlisted businesses in the infrastructure, utilities and logistics sectors.
In Indonesia, there are words that a giant infrastructure fund will soon be launched for the country. According to a recent report by Malaysia’s Business Times, the Islamic Development Bank will be helping the Indonesian government to set up a US$1.5 billion infrastructure fund which will invest in infrastructure projects in the country.
Quoting Mr. Ahmed S. Hariri, director of Islamic Development Bank, the article indicated that the plans for such a fund are well in advanced stages.
The sponsorship from Islamic Development Bank of an Indonesia-based fund is seen as a natural undertaking for the bank in seeking alliances in Asia. With Indonesia being the largest Muslim country outside of the Gulf States, it has created strong ties with the Islamic Development Bank. In October last year, Indonesia’s vice president visited the Kingdom of Saudi Arabia, and received US$26 million for Developing and Upgrading of the Islamic University of Alluddin Makassar Project in Indonesia.
Another infrastructure play which will soon join the list of listed investment vehicles on the Singapore Exchange List is CitySpring Infrastructure Trust (‘CitySpring’). Backed by the Singapore government’s Temasek Holdings, CitySpring Infrastructure Trust is expected to invest in infrastructure plays, not only in Asia, but also in the Middle East, Australia and New Zealand CitySpring’s initial assets will compromise gas and desalination plants in Singapore.
In a development that further indicates infrastructure projects’ revived appeal to investors, in the Philippines, a clutch of investors including TPG Newbridge Capital were previously vying for the 25-year concession to operate the national grid in the country. Most recently, the Hong Kong-listed First Pacific Co. Ltd. took control of Mayniland Water Services by committing US$447.23 million to the financially beleaguered operation.
According to the Asian Development Bank, in the years leading up to 2010, Asia needs US$250 billion per annum to fund new infrastructure projects.
Infrastructure funds have fast assumed an important component in the Asian fund pool. Of the $25 billion fresh capital that came into the market during 2006, infrastructure funds accounted for US$2.8 billion, or 11 % of the 2006 entire pool of capital (fig. 10).
Asia Private Equity Review (APER) is the foremost voice on matters related to private equity/venture capital in the region. Well-recognised as being the singular source for accurate and timely news, in-depth analysis and global perspectives, APER is published by the Hong Kong-based Centre for Asia Private Equity Research. For further information please visit their website at www.asiape.com or email them at info@asiape.com
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