Infrastructure investing achieves lift off

A new category of investment vehicle looks set to become the belle of the 2006 hiring ball: recruiters say infrastructure funds are all the rage.

"Everyone is opening infrastructure funds right now," says Chris Manfield, head of asset management recruitment at the Whitney Group's London office. "The US investment banks have never really played in this scene and are tipped to be the long-term winners."

The latest bank to doff its cap at the infrastructure sector is JPMorgan. Institutional Investor reports that the firm has formed a new infrastructure investments group and will consider investing in all manner of infrastructure projects, from pipelines and water treatment systems to bridges, tunnels and toll roads

Others are equally interested in the area. Goldman Sachs, for example, has been reported as preparing a $3bn infrastructure fund, Dutch bank ABN AMRO is raising an Amro Infrastructure Capital Equity fund, and Merrill Lynch is said to be equally interested in moving into asset class.

The attraction, according to Manfield, is predictable returns. "You take these assets onto your book for a 30-40 year period, and you know exactly what kind of returns to expect," he says. "It's perfect for the institutional pension market: they look and feel just like fixed income assets."

Manfield says a lot of the infrastructure hiring activity is set to take place in the US as American banks move in. But London is also seeing its share of activity. Australian players Babcock & Brown and Macquarie Bank are dominant in the UK infrastructure space, and Manfield says rival Ozzie funds such as Hastings and Challenger are also setting up in London.

Who's being hired? Definitely not standard fund management types. Because infrastructure funds often invest in actual roads and water treatment systems, Manfield says it helps to have a private equity background. People with knowledge of project finance, securitisation, and corporate finance are also needed.