A THOROUGH UNDERSTANDING OF PRIVATE EQUITY

RETOUR SOMMAIRE

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2010

INDUSTRY OVERVIEW

Since 2004, the number of funds that include clean tech investments as part or all of their industry scope has grown rapidly at the worldwide level, nearly quadrupling. Despite the slowdown in the global economy, this sector seems set to continue its growth. A recent survey on global trends in venture capital 16 shows that in Europe 71% of venture capitalists surveyed said they intended to increase their investments in clean technologies.

Infrastructure

1.2.7

The private equity infrastructure sector involves investments in a broad range of infrastruc- ture projects in various fields, such as transport, energy, telecoms and healthcare as illus- trated in the table below.

Figure 11 – Main sectors targeted by private equity infrastructure

Energy and services to the community

Social and leisure infrastructures > Hospitals > Schools, universities > Urban restoration > Prisons

Transport

Communication

> Roads and motorways > Bridges > Ports

> Natural gas > Electricity

> Cable networks > Information and communication technologies > Satellites > Broadband internet

> Energy performance > Renewable energies > Water > Waste management

> Airports > Railways

> Stadium and other sportive infrastructures

Copyright CACEIS, 2009

The infrastructure fund industry has grown in both developed and emerging markets from what most considered a small subset of the private equity industry, into what is now often considered to be an asset class on its own. This sector displays little correlation with other markets; Whatever the state of the economy or consumer confidence, consumer demand for the services provided by infrastructure as- sets is generally quite inelastic, as the assets are often essential utilities such as water and electricity provision. Social infrastructure assets, such as schools and hospitals, are considered to be particularly defensive investments, as their revenue streams are espe- cially resilient in the face of an economic downturn. As a consequence, infrastructure funds expect a continuing ability to attract institutional investors, although many investors have been forced to delay making new investments in the current economic context 17 . Furthermore, the long-term nature of infrastructure investing, as well as the diversification and increased returns it can offer, makes it an attractive opportunity for many sovereign wealth funds. The illiquid nature of infrastructure investment is not an issue for these funds as they have vast amounts of capital at their disposal and have little difficulty in meeting capital calls 18 .

16 Source: Deloitte, “Global trends in venture capital 2009 global report“, June 2009 17 Source: L’Agefi Hebdo, “Les fonds infrastructures veulent se faire une place”, 16-22 April 2009 18 Source: Preqin Ltd, “Infrastructure spotlight – Sovereign Wealth Funds investing in infrastructure”, April 2009

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