Private Market Infrastructure Funds

In the international infrastructure finance markets, investments through the private equity method have played a significant role. There has been a policy push and regulatory nudging to consider increased investments in the infrastructure sector. The typical routes for institutional investors to enter the infrastructure space include unlisted funds, listed funds, direct investments, co-investments, listed securities, and project financing. Unlisted funds are the most popular choice, followed by direct investments and co-investments. The growth of institutional investors has spread wide and across many developing countries, and the assets under the management of private equity infrastructure investors are estimated to be about $582 billion in 2019.. The infrastructure funds have been configured under different formats, reflecting the respective region’s requirements, for instance Indian government has structured Infrastructure Investment Trusts on the lines of REITs.. The private equity and infrastructure funds, who target equity investments, are attempting to provide the direction for uptake of sustainable infrastructure. The advantages and the limitations due by the increased participation of infrastructure funds are still being debated. The performance of the infrastructure allocation in the institutional investors such as the pension and insurance funds’ portfolios are still not conclusively answered. Either way, the infrastructure funds have created a tectonic shift in how infrastructure is financed, and the approach is here to stay.