A growing number of institutional investors are looking to invest directly in infrastructure rather than committing to pooled funds, new survey data from Preqin show.
Of the 461 infrastructure investors surveyed by Preqin, 56% said they are looking to make new direct investments in 2015, up from 29% in 2013.
Conversely, 65% of respondents said they are looking to make new fund investments over the course of 2015, down from 91% two years ago.
Despite a reduction in the number of investors targeting pooled funds, fund commitments remain the most common approach to infrastructure investing, particularly among smaller investors and first-time investors, said Andrew Moylan, head of real assets products at Preqin, in a news release.
Despite changes in investment strategy, infrastructure allocations are on the rise, Preqin found.
At the end of 2014, the average current allocation to infrastructure was 4.3% of total assets, up from 3.6% in 2013. The average target allocation also rose to 5.7% at the end of 2014, up from 5.1% a year earlier.
That being said, high valuations and lack of investment opportunities might have some infrastructure investors investing less fresh capital in the short term, Preqin said. “While the majority of respondents expect to commit more capital in 2015 than they did in 2014, or will be maintaining the level of outlay to infrastructure, a sizable proportion expects to put less capital to work.”
The long-term outlook is positive, however. In a separate survey of 43 infrastructure investors, 67% said they expect to increase their allocations in the long term, while the remainder expect to maintain their current allocation.
Both surveys were conducted at the end of 2014.