APPENDIX A.2  A Source of Private Finance: Equity

As described in Appendix A.1, most infrastructure assets or enterprises will be partly funded by equity (see Figure 1). The two main sources of equity are usually described as corporate or institutional. The pertinent features of these sources are described in this chapter. This chapter also provides information on the kinds of returns that equity investors seek and how these returns are measured by considering the net present value (NPV) vs. the internal rate of return (IRR).

Understanding the dynamics of the infrastructure equity market is important because it is usually the equity investors who will lead the private finance engagement in an infrastructure opportunity.

Figure 1: Sources of equity