The American presidential elections have placed infrastructure at the center stage of an economic stimulus plan to be launched after the new administration has taken office on January 20, 2017. The details of the plan are still in the making, and the process to vote and implement this plan may take some time. However, the intentions of the upcoming administration point towards tax incentives combined with public-private partnerships.

Existing and new US assets would be a natural fit and a welcome addition to the deal flow of private infrastructure funds, notably as strategic US assets are unlikely to be sold to foreign investors such as sovereign wealth funds. A more vigorous deal flow could ease concerns about capital deployment bottlenecks and valuation increases, which are both associated with increased allocation to infrastructure by institutional investors.

Indeed, infrastructure presents attractive investment features, with the clear benefits of supporting higher amounts of capital per asset than real estate for example, and enjoying some sort of local monopoly or at least high barriers to entry. Being a long-term investment, providing yield immediately (for core infrastructure funds) or in the mid-term (for brownfield and greenfield funds), with predictable and stable cash-flow streams, infrastructure matches the requirements of large investors such as pension plans.

Returns and cash-flow patterns of private infrastructure funds are of importance to fund investors (limited partners, or “LPs”). Pevara provides a wealth of information to deepen our understanding of this private investment strategy.

Table 1 – Benchmark IRR quartiles of private infrastructure funds, by region

Table 1 – Benchmark IRR quartiles of private infrastructure funds, by region

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