It’s only mid-January and already two records have been broken in the secondaries market. This week Pantheon said it had raised $5.3 billion for its latest infrastructure secondaries programme, just beating Ardian‘s previous record of $5.28 billion.

The news comes a week after Lexington Partners raised $22.7 billion for the largest secondaries fund ever.

Pantheon’s raise for Global Infrastructure Fund IV comes at a time when the infrastructure market is being shaken up. This week BlackRock agreed to acquire Global Infrastructure Partners in a $12.5 billion deal, and General Atlantic agreed to purchase Actis, a UK infrastructure specialist. As our colleagues at Infrastructure Investor noted, the two massive M&A processes this week underline the asset class’s skyrocketing popularity.

“Driven by the unbeatable – and increasingly intertwining – tailwinds of the energy transition and digital infrastructure, its essential nature was underlined by covid, with the change in our macroeconomic regime putting the spotlight on infrastructure’s ability to pass through inflation,” II wrote. If BlackRock chief executive Larry Fink’s tea leaf reading is anything to go by, the “future in private markets is going to be infrastructure”, as he told CNBC last week.

That the heightened interest in infrastructure on the primary side is likely to provide dealflow for secondaries buyers down the line is a no-brainer. The market for infrastructure secondaries and traditional LP secondaries is unrecognisable today compared with previous years, Andrea Echberg, head of Pantheon’s global infrastructure and real assets team, told Secondaries Investor. The amount of dealflow has doubled in two years, and today it comprises high-quality portfolios of top-tier GPs, she added.

It also helps that discounts remain in the range of 10-20 percent below net asset value, Echberg said.

Consolidation among infrastructure managers – a third such deal was just disclosed as this report was going to press – is also likely to result in LP sales. An investor who previously had exposure to two managers and who suddenly finds itself with a bigger combined stake to the new entity may want to sell off some of that exposure to reduce single GP concentration limits – something Echberg said she expects will drive secondaries activity.

With around $1.2 trillion of NAV in unlisted infrastructure funds, according to Echberg, a 2 to 3 percent turnover rate during an infrastructure fund’s life becomes meaningful dealflow. Add to that LPs receiving fewer distributions from their alternatives portfolios and some of them needing greater liquidity to re-up in funds or commit to new strategies, and it’s not hard to see why Pantheon ended up raising a fund 2.5x larger than its previous vintage.

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