Goldman Sachs Asset Management this week raised just over $15 billion for two secondaries programmes, the bulk of which – $14.2 billion – was for its flagship private equity-focused Vintage IX vehicle.
What’s occupying less of the spotlight is that around $1 billion of its total haul was for the firm’s debut commingled vehicle dedicated to infrastructure secondaries. While the statement disclosing the double fund close did not mention Vintage Infrastructure Partners’ target (and global co-head of secondaries Harold Hope would not comment on this either when speaking with Secondaries Investor this week), we understand the fund set out to raise between $500 million and $700 million.
GSAM’s inaugural haul comes at a time of heightened interest in infrastructure on multiple fronts. Two infrastructure managers have been snapped up in as many weeks, with CVC Capital Partners agreeing to acquire Dutch infra manager DIF Capital Partners and PEI Group owner Bridgepoint agreeing to purchase Energy Capital Partners.
Capital raising for direct infrastructure funds has been going gangbusters, with record fundraising totals recorded over the past two years: $160.5 billion last year and $154.8 billion in 2021, according to data from affiliate title Infrastructure Investor. This year the picture looks less rosy, with first half fundraising plummeting 93 percent to $7.6 billion year-on-year.
Still, institutional investors are underinvested in the asset class: Infrastructure Investor’s H1 2023 Investor Report found that nearly half of all institutional investors were under-allocated to the asset class as of 30 June. That includes 50 percent and 45 percent of all private and public pensions, respectively.
Goldman appears to have benefited from heightened LP interest overall in the asset class, with Hope telling Infrastructure Investor that most LPs who committed to its VIP fund did so via their infrastructure allocations.
Expectations are for a banner year in infra secondaries. David Perrin, a partner at Campbell Lutyens, tells Secondaries Investor his firm predicts as much as $15 billion in deal volume this year – more than double last year’s amount. Driving this is a large increase in LP-led sales – which are expected to grow from around $2.5 billion last year to roughly $7 billion this year – as cash-strapped investors seek capital for re-ups.
Dedicated capital is also expected to increase, with $20 billion to $25 billion in dry powder for the strategy to be raised over the next 18 months, according to Perrin. Three-quarters of the largest dozen secondaries managers already have dedicated capital for infra secondaries, and more managers will add to this mix, he says.
According to Hope, the greater acceptance of the secondaries market among investors is ringing true in infrastructure as well. Ultimately, LPs’ needs for liquidity appears to be the driving force for growth in the strategy – even if they are willing to stomach 20-year illiquidity periods, at least at the outset.
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