Our study of early investors (over 20 years) and of previous investment cycles (pre 1900) has highlighted critical success factors for infrastructure investment.
Success Factors
- Alignment of infrastructure program with the fund's commitments and liability profile
- Rule of law and property rights
- Clear definition of asset characteristics
- The initial investment decision
- Subsequent capital expenditure investment decisions
- Management of conflicts of interest which are common in the sector
The infrastructure sector offers excellent investment features but it is more complex than initially perceived
- Many investors have incurred sub-par performance or even lost all of their capital in this "low risk" sector
- Infrastructure is different from traditional private equity and this approach has created new investment risks, especially inappropriate debt burdens