There appears to be a flurry of activity around infrastructure secondaries fundraising right now, and for good reason.

Hamilton Lane is seeking as much as $1.25 billion for Hamilton Lane Infrastructure Opportunities Fund II, while Ares Management is seeking $2 billion for Secondaries Infrastructure Solutions III and is eyeing a fourth quarter final close. Pantheon wants to raise $3 billion for Pantheon Global Infrastructure Fund IV, according to documents prepared for a US pension meeting last month.

Goldman Sachs Asset Management has raised at least $142.8 million for Vintage Infrastructure Partners, which appears to be its debut dedicated vehicle for investing in the asset class, according to Secondaries Investor data. Ardian holds the top place for largest dedicated infra secondaries vehicles, with $5.25 billion raised last year, ahead of Strategic Partners’ previous record-holding $3.75 billion 2020 vehicle.

Brookfield Asset Management and Macquarie Asset Management are also building out dedicated teams.

Advisers are bulking up too, with Campbell Lutyens saying last week it had hired a former Solomon Partners and RBC Capital Markets professional to focus on secondaries advisory in the asset class from New York.

There is an “increasing number of dedicated infrastructure secondaries funds actively deploying or being raised”, PJT Partners wrote in its H1 2023 Secondary Market Insight report, out this week. Even buyers without dedicated infrastructure secondaries funds have allocations for the asset class within their flagship offerings or through separately managed accounts, PJT noted.

It’s easy to see why there’s an uptick in activity: pricing for stakes in infra funds in the first half of the year was the second highest of all strategies after private credit, at 89 percent of net asset value, PJT’s report found (private credit was just 1 percentage point higher at 90 percent of NAV). LPs wishing to sell off exposure in infra funds could therefore benefit from higher pricing compared with selling stakes in funds of most other asset classes, on average.

With higher pricing comes potentially more sellers, especially at a time when some LPs are strapped for cash. Case in point: when infra manager Ancala Partners found a new home for three of the UK-based assets in its 2017-vintage Ancala Infrastructure Fund I in a process led by Pantheon last month, none of the fund’s original LPs chose to roll over their exposure.

“A lot of the original investors were UK defined benefit pension schemes, and they wanted liquidity,” Ancala managing partner Spence Clunie told affiliate title Infrastructure Investor.

One dynamic driving dealflow is the energy transition, which has meant that LPs looking to sell exposure to infrastructure funds should take into account the varied buyer landscape, as buyers may have different different target returns based on whether they have flexible mandates or cannot deploy into thermal assets, according to PJT’s report.

The US Inflation Reduction Act, which includes tax credits for alternative fuels, is providing tailwinds for renewables and energy transition, meaning more infrastructure managers are considering continuation funds, PJT noted.

All things considered, this is a sub-sector that appears set to grow. PJT’s prediction is that infra secondaries will more than double to $30 billion by the end of this decade, while Macquarie estimates there will be between $50 billion and $67 billion of infrastructure secondaries assets under management by 2025. Expect more firms to launch dedicated vehicles in the years to come.

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