Recent takeovers of infrastructure firms by fund managers like BlackRock and General Atlantic are likely to spur more deal making in the sector, the head of global infrastructure at Australian sovereign investor QIC told Reuters.
BlackRock last month paid $12.5 billion for Global Infrastructure Partners, which has a portfolio including Britain’s Gatwick airport.
Days later, private equity firm General Atlantic bought British-based infrastructure investor Actis.
Transactions like these are likely to push rivals to look at similar deals, especially because scale can benefit fund managers in some areas of infrastructure, according to Ross Israel, head of global infrastructure at the A$103 billion ($66 billion) QIC.
“When you have a number occur, you get a mark of value and if someone’s interested it begins a dialogue,” he said in an interview.
“Competitors of those that have made acquisitions see the need to match that and so I think you will more than likely see other transactions emerge off the back of that market price and that peg.”
Set up by the Queensland state government in 1991 to fund public sector pensions, QIC manages a roughly A$33 billion infrastructure portfolio, which includes stakes in Brussels Airport and Thames Water.
Israel’s comments come amid a series of record hauls for new infrastructure funds. Investment firm KKR & CO said earlier this month it had raised $6.4 billion for the largest Asia-Pacific infrastructure to date.
In December, Brookfield Asset Management raised $28 billion for its largest infrastructure fund yet.
Reuters