3.15 More recently, a substantial worldwide pool of capital has become available for investment in infrastructure through specialist managed infrastructure funds. It is estimated that, globally, dedicated infrastructure funds have some $130 billion under management and that some 77 per cent of this was raised in 2006 and 20071.
3.16 Infrastructure funds typically seek investments that offer a running financial return (or yield), rather than necessarily the prospect of capital growth, reflecting their relationship with pension and other long-term investment portfolios. As such they tend to favour investing in the operational phase of projects, rather than at the outset of their construction. They also tend to seek concession-type arrangements and regulated infrastructure assets. Because of the volume of funds available for investment in infrastructure assets, competition has pushed up asset values and led to infrastructure funds extending the boundaries of the infrastructure asset class. The Government welcomes engagement with infrastructure funds and other financial investors as it considers the full range of delivery models that might meet its objectives for the next generation of infrastructure investment.
1 How investors can get more out of infrastructure, Robert N. Palter, Jay Walder and Stian Westlake, The McKinsey Quarterly, February 2008