Real assets funds raised the highest amount of quarterly capital in nearly two years during the third three months of 2015, Preqin has reported.
The data firm found that $50.6 billion was raised by unlisted infrastructure and real estate funds between July and September, the highest aggregate since the fourth quarter of 2013. Infrastructure funds closing during Q3 2015 raised $13.1 billion, while real estate vehicles raised $37.5 billion.
In the same time frame, world equity markets saw significant volatility and a much anticipated US rate rise was postponed by the Federal Reserve.
In their quest for relatively stable assets, investors were particularly focused on “opportunistic” real estate funds, said Andrew Moylan, head of real assets at Preqin. This type of assets funds accounted for more than half of all the cash raised for real estate funds so far in 2015.
“The first three quarters of 2015 have seen more capital raised for opportunistic real estate funds than in any full year since the global financial crisis,” Moylan said. “With concerns over pricing core assets, many institutional investors have moved up the risk curve in search of returns.”
Moylan added that fundraising was likely to remain strong in the next few months “with more mega-funds currently being marketed, and institutional investor appetite for opportunistic funds still high”.
“With a record number of funds being marketed, fundraising is very crowded and remains a long process for many, with the average firm taking over 18 months to reach a final close.”—Andrew Moylan, PreqinFor the past year, data has shown investors preferring bigger funds for real assets. In 2014, while the amount of capital raised by infrastructure and real estate managers remained broadly the same as 2013, the number of managers raising money fell dramatically as the larger players exerted their dominance.
The 160 infrastructure funds currently raising money from investors is the highest figure on Preqin’s records. They are chasing an aggregate $95 billion in funding.
However, these funds continue to face major challenges, according to Preqin’s Moylan: “With a record number of funds being marketed, fundraising is very crowded and remains a long process for many, with the average firm taking over 18 months to reach a final close.”
Moylan added that despite the asset class’ $115 billion in undeployed capital, “fund managers are facing more competition to put capital to work, and finding attractive assets at compelling pricing is a challenging prospect.”
There are 437 private real estate funds globally raising money from investors, seeking a collective $152 billion.
Across both asset classes, funds hold an aggregate $366 billion of capital still to be deployed, Preqin said.
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