Why Are Infrastructure Managers Being Acquired?

April 15, 2024 | 3 Min Read

Executive Summary:

  • Across the private markets broadly, as the fundraising environment remains challenging, investment firms are looking to diversify their investor offerings and serve as a ‘one-stop shop’ for alternative assets.
  • Institutional investors want infrastructure exposure because of its historical outperformance, resilience and low volatility in the private markets.
  • In-house infrastructure teams provide specialized expertise but are difficult to build, so institutions are looking to recruit infrastructure managers who can source and execute deals.
  • Moving forward, successful investment integrations may benefit from larger platforms’ scale and their teams’ unique ability to put capital to work from day one. 

For anyone paying a sliver of attention to the industry of late, it would have been hard to miss the news about a multitude of large asset managers around the world that have acquired infrastructure managers in recent months. What’s the reason behind this trend?

One of the first important points to consider is that infrastructure has been one of the fastest growing areas of the private markets, largely due to its relative outperformance, resilience and low volatility. Institutional investors are seeking more exposure to the asset class, and large managers want to ensure that they have the teams in place to fulfill those demands.

In an era of prolonged high inflation, infrastructure benefits from long-dated contract structures that generally enable asset owners to pass increased operational expenses through to their customers in real time. In addition to historically being a safe bet during times of inflation, the asset class has also stood the test of time when it comes to delivering performance. Over the last 10 vintage years, our data shows that infrastructure has delivered long-term, stable returns across all regions globally.

Pooled One-Year IRR by Asset Class and Geography
Trailing 10 Vintage Years

What’s more, if we look at the highest and lowest annualized infrastructure performance over the last nearly 20 years, even in the worst five-year periods, investors didn’t experience negative performance like they may have in some other areas of real assets.

Highest 5-Year Annualized Performance

Lowest 5-Year Annualized Performance

Add onto all this the benefits of portfolio diversification through non-correlated returns and it’s pretty obvious why investors are drawn to infrastructure. But why don’t they just build their own teams? Well, it’s difficult to build an infrastructure team in-house; specialized teams are valuable. Hitting the ground running with teams that have the experience and network to source and execute on deals is essential.

Across the private markets broadly, as the fundraising environment remains challenging, investment firms are looking to diversify their investor offerings and serve as a ‘one-stop shop’ for alternative assets. The LP appetite to take advantage of multi-strategy synergies coming from just one asset manager has driven consolidation. Alongside that, specialist teams that may have faced more of an uphill battle with fundraising are prime targets for M&A.

So What?

When a trend like this takes hold, there will inevitably be mixed results. Some integrations will be successful, while others will be more challenging. The successful ones will benefit from the scale of larger platforms and will use their team’s sector expertise to put capital to work from day one.

For those that find integrations more challenging – due to organizational culture or otherwise – integrations might lead to some team spinouts in the coming years. Overall, one takeaway is clear from the abundance of transactions among these managers: There is a continued and growing interest in investing in infrastructure.

Like these insights? Take a look at our 2023 Real Assets Market Overview and stay tuned for our 2024 edition, which offers a comprehensive look at the trends, challenges and opportunities shaping real assets investment today. 

Private Equity – A broad term used to describe any fund that offers equity capital to private companies. 

Credit – This strategy focuses on providing debt capital. 

Real Assets – Real Assets includes any PM fund with a strategy of Infrastructure, Natural Resources, or Real Estate. 

DM Buyout – Includes any buyout fund that is primarily investing in developed markets of North America, Western Europe and Global. 

EU Buyout – Any buyout fund primarily investing in the European Union. 

Venture Capital – Venture Capital incudes any PM fund focused on financing startups, early-stage, late stage, and emerging companies or a combination of multiple investment stages of startups. 

Real Estate – Any closed-end fund that primarily invests in non-core real estate, excluding separate accounts and joint ventures. 

Infrastructure – An investment strategy that invests in physical systems involved in the distribution of people, goods, and resources. 

Natural Resources – An investment strategy that invests in companies involved in the extraction, refinement, or distribution of natural resources. 

MSCI World Index – The MSCI World Index tracks large and mid-cap equity performance in developed market countries. 

VC/Growth – Includes all funds with a strategy of venture capital or growth equity. 

BofAML High Yield Index – The BofAML High Yield index tracks the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market. 

Credit Suisse Leveraged Loan Index – The CS Leveraged Loan Index represents tradable, senior-secured, U.S. dollardenominated non-investment grade loans. 

MSCI World Energy Sector Index – The MSCI World Energy Sector Index measures the performance of securities classified in the GICS Energy sector. 

DJ Brookfield Global Infrastructure Index – The DJ Brookfield Global Infrastructure Index is designed to measure the performance of companies globally that are operators of pure-play infrastructure assets. 

MSCI World Index – The MSCI World Index tracks large and mid-cap equity performance in developed market countries. 
This presentation has been prepared solely for informational purposes and contains confidential and proprietary information, the disclosure of which could be harmful to Hamilton Lane. Accordingly, the recipients of this presentation are requested to maintain the confidentiality of the information contained herein. This presentation may not be copied or distributed, in whole or in part, without the prior written consent of Hamilton Lane. 
The information contained in this presentation may include forward-looking statements regarding returns, performance, opinions, the fund presented or its portfolio companies, or other events contained herein. Forward-looking statements include a number of risks, uncertainties and  other factors beyond our control, or the control of the fund or the portfolio companies, which may result in material differences in actual results, performance or other expectations. The opinions, estimates and analyses reflect our current judgment, which may change in the future. 
All opinions, estimates and forecasts of future performance or other events contained herein are based on information available to Hamilton Lane as of the date of this presentation and are subject to change. Past performance of the investments described herein is not indicative of future results. In addition, nothing contained herein shall be deemed to be a prediction of future performance. The information included in this presentation has not been reviewed or audited by independent public accountants. Certain information included herein has been obtained from sources that Hamilton Lane believes to be reliable, but the accuracy of such information cannot be guaranteed. 

This presentation is not an offer to sell, or a solicitation of any offer to buy, any security or to enter into any agreement with Hamilton Lane or any of its affiliates. Any such offering will be made only at your request. We do not intend that any public offering will be made by us at any time with respect to any potential transaction discussed in this presentation. Any offering or potential transaction will be made pursuant to separate documentation negotiated between us, which will supersede entirely the information contained herein. 
Certain of the performance results included herein do not reflect the deduction of any applicable advisory or management fees, since it is not possible to allocate such fees accurately in a vintage year presentation or in a composite measured at different points in time. A client’s rate of return will be reduced by any applicable advisory or management fees, carried interest and any expenses incurred. Hamilton Lane’s fees are described in Part 2 of our Form ADV, a copy of which is available upon request. 

Hamilton Lane (Germany ) GmbH is a wholly -owned subsidiary of Hamilton Lane Advisors, L.L.C. Hamilton Lane (Germany ) GmbH is authorised and regulated by the Federal Financial Supervisory Authority (BaFin). In the European Economic Area this communication is directed solely at persons who would be classified as professional investors within the meaning of Directive 2011/61/EU (AIFMD). Its contents are not directed at, may not be suitable f or and should not be relied upon by retail clients. 

Hamilton Lane (UK) Limited is a wholly-owned subsidiary of Hamilton Lane Advisors, L.L.C. Hamilton Lane (UK) Limited is authorized and regulated by the Financial Conducts Authority. In the UK this communication is directed solely at persons who would be classified as a professional client or eligible counterparty under the FCA Handbook of Rules and Guidance. Its contents are not directed at, may not be suitable for and should not be relied upon by retail clients. 

In Canada, this document is directed only to Canadian residents that are “accredited investors” as defined under section 1.1 of National Instrument 45-106 Prospectus Exemptions or section 73.3(1) of the Securities Act (Ontario). This document is not, and under no circumstance to be construed as an offering memorandum, an advertisement or a public offering of the fund interests described herein in any province or territory of Canada (each, a “Canadian Jurisdiction”). Under no circumstances is this document to be construed as an offer to sell securities or the provision of advice in relation to any securities. Any offer or sale of the fund interests described in this document will be made pursuant to the definitive private placement documents for the fund. In addition, any offer or sale of, or advice on, the fund interests described in this document will be made only by a dealer registered in the applicable Canadian Jurisdiction which may include Hamilton Lane (Canada) LLC. No Canadian securities regulatory authority has reviewed or in any way passed upon the information contained in this document or the merits of any securities described in this document, and any representation to the contrary is an offence. 

Hamilton Lane Advisors, L.L.C. is exempt from the requirement to hold an Australian financial services license under the Corporations Act 2001 in respect of the financial services by operation of ASIC Class Order 03/1100: U.S. SEC regulated financial service providers. Hamilton Lane Advisors, L.L.C. is regulated by the SEC under U.S. laws, which differ from Australian laws. 

The PDS and target market determination for the Hamilton Lane Global Private Assets Fund (AUD) can be obtained by calling 02-9293-7950 or visiting our website www.hamiltonlane.com.au 

Any investment in Hamilton Lane Products entail a risk of loss. Investors can lose their investment in whole or in part. For further information on the risk associated with the investment, please see the risk section in the confidential private placement memorandum, as such is amended and/or supplemented from time to time. Total performance includes both realized investments and unrealized investments. With respect to underlying direct investments that are unrealized, investment values are prepared by third-party valuation providers which is then reviewed and approved by Hamilton Lane. The portfolio investments in which the Partnerships have invested may have not yet issued their financial statements. The estimated investment values therefore rely on the information available at the time of approval by Hamilton Lane. The actual realized returns on unrealized investments will depend on factors other than the original cost, such as the value of the assets and market conditions at the time of disposition, any related transaction costs, and the timing and manner of sale, all of which may differ from the assumptions on which the valuations contained herein are based. Accordingly, the actual realized returns on these unrealized investments may differ materially from the assumed returns indicated herein. They are not a reliable indicator for future performance. Where in this presentation gross performance data is used, such data does not include fees, expenses and carried interest. Investors should be aware that net performance will be significantly lower. 

Any tables, graphs or charts relating to past performance included in this presentation are intended only to illustrate the performance of the indices, composites, specific accounts or funds referred to for the historical periods shown. Such tables, graphs and charts are not intended to predict future performance and should not be used as the basis for an investment decision. 

The information herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice, or investment recommendations. You should consult your accounting, legal, tax or other advisors about the matters discussed herein. The calculations contained in this document are made by Hamilton Lane based on information provided by the general partner (e.g., cash flows and valuations), and have not been prepared, reviewed or approved by the general partners. 

Recent Content

Video | 8 Min Watch

SuperReturn: Infrastructure & Private Credit Opportunities

What is the current opportunity set for infrastructure and private credit investing? Hear insights from Head of SEA Kerrine Koh.

Watch the Video
Insights | 3 Min Read

How High Is Too High | Are Infrastructure Valuations Grounded in Reality?

Headline valuations associated with infrastructure transactions have, for years, been subject to mockery, skepticism or a more subtle roll of the eyes, with airports, data centers and towers considered usual suspects. So, what do we make of infrastructure valuations in today’s environment?

Read the Research Article

Introduction to Infrastructure

Infrastructure investing: An introduction to infrastructure asset management in the private markets.

Learn More

We use cookies to improve user experience, and analyze web traffic. For those reasons, we may share your site usage with our analytics partners.

Learn More