As we stare down the barrels of the summer lull having published IJGlobal’s league tables and the IJInvestor funds report for H1 2018, this infra hack is currently horsing up the M6 to Edinburgh to celebrate a rather significant birthday in the motherland.

It was while lying through my teeth, insisting I turn 40 tomorrow (for those who care to put it in the diary for next year) that the mind turned to numbers… and (broadly speaking) how they get bigger every year.

Over the years, we’ve become blasé about the vast reserves of capital being corralled by the mega funds to be invested by a single fund manager. And that begs the question: when does a bog-standard fund become a “mega fund”?

Received wisdom has that cut-off coming in at between $3 billion (for the eternally optimistic) and $5 billion (for the realists) for closed-ended, unlisted infrastructure funds. And while these are indeed mega funds, there is an ultra-mega fund category.

Back in January 2017, the market was hugely impressed when Global Infrastructure Partners hit final close on GIP III with $15.8 billion in the coffers. This fund has a global remit and ability to invest equity in – pretty much – everything.

Lagging the front-runner by a trifling $1.8 billion, you have Brookfield Infrastructure Fund III with $14 billion amassed at final close in July 2016, benefiting from the same international equity strategy as GIP.

These two funds clearly warrant the ultra-mega fund status – all the more impressive for the (relative) immaturity of the asset class.

We will doubtless see more funds crop up with these headline grabbing final closes, but the reality is that mega fund status will – for now – settle at a rung below that.

Mega fundraising

For the sake of this piece – and the sanity of this author – we shall focus on closed-ended funds, and not include evergreen funds like the (circa) $12 billion IFM Investors and JP Morgan’s $10 billion open-ended fund.

These open-ended funds have been steadily growing and are the unsung heroes of the infrastructure fund space. A good example of this is the $40 billion Blackstone Infrastructure Partners that started fundraising last October (2017).

Fundraising never ceases. At the moment, we think EQT is in the market for its €8 billion ($9.3 billion) EQT Infrastructure IV that will have an equity strategy. A bit more concrete, MIRA in May 2017 launched the Macquarie Super Core Infrastructure Fund and hit first close this month (July 2018) at €2.5 billion, more than 35% on its way to the €7 billion ($8.2 billion) target.

Just continuing the theme of funds in market looking to build mega funds, the following – according to the IJInvestor database – are out looking for big numbers:

• NGP Energy Capital Management: target size $5.3 billion
• Alinda Capital Partners: $5 billion
• KKR: $5 billion
• IFC Asset Management: $5 billion
• EIG Global Energy Partners: $5 billion
• Blackstone: $4.5 billion
• TPG Sixth Street Partners: $4 billion
• F2i SGR: $3.5 billion
• MIRA: $3.5 billion
• BlackRock: $3.5 billion
• Oaktree Capital Management: $3.5 billion
• Omnes Capital: $3.5 billion

And that’s just the tip of the iceberg – the iceberg in this case being a huge spreadsheet downloaded from IJInvestor identifying masses of infra funds raising funds and at different stages in the process.

According to our data, closed-ended infra funds are seeking $291.3 billion in capital to deploy across infrastructure and energy.

Mega funds in play

Having compiled a list of the largest 20 infra funds (see table below) that have already made it to final close, and that’s $118 billion of cash targeting assets – primarily – in the energy space around the world.

All the top 20 have an equity strategy apart from Copenhagen Infrastructure Partners with its Copenhagen Infrastructure III which also has the capacity for mezz debt. Its focus in renewable energy and power and its geographic focus is Europe, North America and Asia Pacific.

As to sectors, three are purely targeting opportunities in the oil and gas space:

• EnCap Investments with EnCap Energy Capital Fund XI
• EnCap Investments – EnCap Energy Capital Fund X
• NGP Energy Capital Management – NGP Natural Resources XI

These three funds also have a pure North America geographic focus.

The largest funds – GIP III and Brookfield Infrastructure Fund III – have global remits… which is fair enough. When you have that much money to shift out the door, you better not be restricted by location!

As to currency, of the top 20 largest funds raised to date, 18 of them have USD as their currency and the other two – MEIF 2 and EQT Infrastructure III – are in EUR. Fund domicile follows a similar trend with the US dominating massively.

The bottom line

Evergreen funds are the ones to watch when it comes to fund size, they’re just getting bigger and bigger. Definitely funds to watch.

Yes, funds are – by-and-large – getting bigger year-on-year. We will see more ultra-mega funds hit final close in the years to come. It will be a point of pride (if not also a point of panic for those who have to deploy such huge sums) to outdo their last fundraise.

It’s becoming every bit as much a cliché as the US being referred to as “50 different markets” but track record is king and we will definitely see more large funds in the mega category.