What now for all that dry powder?

16 April 2020 - 12:00 am UTC

Record levels of dry powder, now close to USD 200bn, have built up across infrastructure over the past two years. With asset valuations in most sectors battered by the COVID-19 lockdown, many new funds will see a buyer’s market but there is another strategy being discussed too, reports Colin Leopold 


There was a joke going around among infrastructure fund advisers in the final months of 2019. 

A well-known consultant is called up by a fund manager asking for help on strategy, where to invest and in what sectors. “Yes, sure we do that,” says the adviser, “tell me about how much you want to raise and any limitations on your LPs, geographic preferences etc.”

“No, no, you don’t understand,” the fund manager replies, “we’ve already raised the money.”

According to one of the people involved, the joke is based on a true story and the figure was more than GBP 5bn coming from a London-based manager. A few months on, with most economies in Europe and the US still under lockdown, trying to get in front of LPs to discuss an infra strategy or launch a new fund seems almost laughable.

“The market now is so uncertain it’s hard to know what a strategy that’s going to work would even look like,” says one infrastructure advisory source. “When deal activity starts to fall and dry powder continues to accumulate, that can become a problem.”

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