Attracting Institutional Investment into Regeneration: Necessary Conditions for Effective Funding

At an international level, governments are increasingly seeking to ensure greater involvement of the private sector in the financing and delivery of regeneration and sustainable communities. In order to attract more private finance, the public sector, in its more strategic role, seeks to create confidence for the private sector to invest. However, the success of such an approach depends on meaningful engagement between the public and private sectors and, in particular, with the financial institutions. The aim of the paper is to understand the needs of investing institutions and to identify the likely constituents of a working model suitable for encouraging institutional investment and bank finance into regeneration schemes. A cross‐asset perspective (property, bonds/fixed income, equities, private equity, hedge funds) is adopted, enabling an understanding of both the asset allocation decision‐making process and the criteria used in the investment selection procedure. Interviews with fund managers explored the investment decision‐making process, provided insights into risk/return criteria and mapped these across to the characteristics that define different stages of the regeneration process. The factors and inputs necessary in designing a regeneration investment vehicle that spans the varying regeneration stages are parameterized and options are forwarded.