As the private infrastructure asset class continues to expand at a faster rate than all but private credit across alternatives, institutional investors are re-upping their target allocations. Meeting these expanding targets can be a challenge when fund commitments can take some years to be fully called.
Other capital deployment models can help investors catch up and reduce allocation gaps more quickly. These include co-investments and co-investment funds; these models also help investors get closer to assets and move up the learning curve on infrastructure business models.
Allocations – a moving target
Drivers of investor allocations to different asset classes vary, with the inflation hedge offered by infrastructure a key attraction. More broadly, and in the longer term, drivers for investors include risk-return expectations and anticipated liquidity needs as well as regulatory constraints. Unlisted infrastructure, as a distinct asset class, is still relatively new, having emerged after 2000 as privatised industries and project finance vehicles created opportunities for new sources of potential returns for institutional investors.
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Supporting documents
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