Finance, Stakeholder Alignment, Governance
Edited by Raymond E. Levitt, W. R. Scott and Michael J. Garvin
Chapter 7: The role of institutional investors in financing PPP infrastructure
Institutional investors – pension funds, sovereign funds, endowments and family offices – control an enormous amount of investable capital. Estimates of their investment capacity range up to $100 trillion total, worldwide. Historically most of them have invested passively through funds managed by others, surrendering substantial fractions of the returns from these investments to the investment managers. Infrastructure, with its long-term, inflation-adjusted, moderate risk_return cash flows, represents an ideal kind of investment for these investors. However, infrastructure projects are all unique and involve multiple kinds of risks in each phase of their development, that require specialized skills to evaluate. A few large pensions and sovereigns have developed the internal capacity to evaluate, invest in and manage infrastructure projects, with returns offer exceeding 12 percent. The costs of developing this capacity represent a small fraction of the fees typically paid to investment managers. Other institutional investors can benefit from lessons learned by these pensions. Pension funds that are too small to justify doing this can band together and set up aligned investment managers owned by them to invest their syndicated capital.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.