Infrastructure secondaries are gaining momentum as the infrastructure sector attracts investors seeking stable and predictable returns amid heightened market volatility and increased economic uncertainty, said Juri Jenkner, president and co-head of investment at Partners Group.
As the infrastructure asset class matures and more investors shift from building up allocations towards managing exposure within portfolios, Jenkner forecast that the global infrastructure secondary market could grow from $15 billion to $60 billion over the next five years.
"We think infrastructure secondaries going forward will be attractive," he said in a recent interview with The Korea Economic Daily. “It's a more nascent market than private equity that follows the same growth trend... With this strong growth of the LP universe, secondaries will continue to increasingly trade.”
With $152 billion in assets under management as of the end of 2024, Partners Group has been active in secondaries.
In 2024, it deployed around $1 billion across 10 secondary transactions. Since inception, it has executed 58 secondary deals as of the end of 2024 and delivered a fully realized net return of 20.4%.
"It's a good opportunity now, good market opportunity for secondaries, more volumes, more volatility, more uncertainty. You can trade more," said Jenkner, based in Zug in Switzerland.
He has been with the Swiss investment firm since 2004 and has played a key role in its expansion into the credit and infrastructure investment markets.
PRIVATE DEBT SECONDARIESPartners Group also foresees rapid growth in the private credit secondaries space, supported by the continued expansion in the private debt market.
In April, it launched a private credit secondaries fund in collaboration with Generali Investments. The fund, which has a closed-ended structure, is targeting $1 billion.
"Overall, the outlook for the secondary market is going to be very robust ... particularly in the private equity sector, infrastructure and now private debt because of the maturity of the industry," Vincent Ng, managing director and co-head of Asia at Partners Group. "There's a lot of committed capital in that space, a lot of funds."
The firm’s total private credit assets under management currently stand at $31 billion.
10-YEAR PERSPECTIVEThe energy transition to energy stability is a key thematic focus area for Partners Group.
In March, it exited Greenlink Interconnector, a 504 megawatts subsea electricity interconnector linking the UK and Ireland, to Baltic Cable AB and Equitix. The transaction values the infrastructure asset at over 1 billion euros ($1.1 billion).
Since acquiring a controlling stake in Greenlink in 2019 and taking full ownership in 2021, Partners Group has led the electricity grid project through financing and construction to its initial commercial operations early this year.
Zenkner noted Partners Group takes a 10-year investment approach, not only to drive value creation, but also with the next buyer in mind.
“You always need to take a 10-year perspective and think it through for the next buyer as well. That's where the 10 years come,” he said.
ROYALTIESPartners Group invests across five asset classes, including private equity, infrastructure, private credit, real estate and royalties. Amid current volatility, Jenkner sees attractive investment opportunities across infrastructure secondaries as well as royalties.
The firm is a pioneer in the royalties investment space. Since entering the niche market, the team has executed over 30 investments across the investment platform.
Ng said that royalties sit in between private debt and infrastructure, investing in intellectual property rights across sectors such as music, healthcare, metals, mining, commodities and finance. They are highly cash-yielding, counter-cyclical and exhibit low correlation to the macro economy.
Jenkner added its royalties portfolio generates returns in low teens.
In 2024, the Swiss asset manager launched a cross-sector royalty fund with an evergreen structure for institutional investors. The firm then launched another evergreen fund for private wealth investors.
The royalties strategy’s recent investments include Warner Bros. Disney’s film and television music rights, consisting of over 500 titles such as Harry Potter, Lord of the Rings and Game of Thrones.
Meanwhile, Jenkner cautioned that the US real estate market will face more headwinds than Europe's as US interest rates are likely to go sideways for the foreseeable future.
In 2024, the firm exited $18 billion of assets, while executing $22 billion of investments.
Since opening its office in South Korea in 2010, Partners Group has received $5.3 billion in capital commitment from some 40 institutional investors in the country.
Write to Yeonhee Kim at
yhkim@hankyung.com
