PRIVATE EQUITY: GROWING INVESTMENT VEHICLE IN INFRASTRUCTURE

摘要

A demand for infrastructure development concurrent with federal deficits and budget shortfallsfaced by the government has encouraged private participation in infrastructure projects. This hascaused infrastructure funds to evolve. Infrastructure funds allow investors to gain access to theunderlying characteristics of the portfolio of infrastructure assets. These funds have seen agrowth in investment through unlisted and listed equity and are attracting investors because oftheir stable, long-term nature and relatively strong yields. Pension funds have also invested in theinfrastructure sector for portfolio diversification and risk mitigation. The investors can not onlyreduce risk by investing in a portfolio of infrastructure entities with a negative or relatively lowcorrelation between them, but also by investing in the equity market of other sectors. A lowcorrelation between infrastructure and other sectors has enticed the risk-averse managers toinvest in infrastructure funds. This paper discusses various cash inflow channels that supportinfrastructure growth and the reasons for the exponential growth in infrastructure funds. Variousbarriers and regulations that discourage investment in infrastructure assets are also highlighted.