LPs divided on infra secondaries

About 54% of LPs don’t plan to be active in infrastructure secondaries in the next 12 months.

Limited partners’ views toward infrastructure secondaries are divided, according to a recent survey by PEI’s Research and Analytics division.

Slightly less than half (45 percent) of LPs expect to be active in infrastructure secondaries in the next 12 months, but the majority (54 percent) don’t expect to engage in the market at all.

Of the LPs active in infrastructure secondaries, an overwhelming number – 43 percent – plan to be buyers. Meanwhile, only 3 percent plan to sell on the market.

Source: PEI’s Research and Analytics

Asset managers are likely to be the most active buyers of infrastructure portfolios, with 71 percent expressing interest in purchasing assets. Comparatively, only 36 percent of pension funds and 36 percent of LPs characterised as ‘other’, or non-traditional, plan to be buyers.

The only LPs that expressed interest in using the market to sell assets are those classed ‘other’. Even so, sellers in this group only make up 7 percent.

“Selling has become much more of a strategic decision than a distressed one,” and a willingness to use the secondary market regularly has “trickled down to some unexpected sellers”, Mark McDonald, director of EMEA and Asia secondary advisory at Credit Suisse, recently told Secondaries Investor’s sister title Infrastructure Investor. 

LPs that have actively sold on the infrastructure secondaries market this year include the University of Arizona Foundation, Fleming Family & Partners and Japan Trustee Services Bank, all of which sold stakes in Macquarie infrastructure funds.

Still, 57 percent of non-traditional LPs don’t plan to be active at all, the study revealed.