Infrastructure funds have become increasingly important vehicles in financing infrastructure assets. Such assets are typically less sensitive to wider economic changes, and can be considered more of a ‘defensive’ investment. Infrastructure also offers long-term stable financial returns, meaning it can be attractive to investors.
This section begins by setting out the background to infrastructure funds. It then moves on to establish the different types of funds and key distinctions in terminology (such as primary and secondary market investment). In closing it also considers investors before touching on associated risks.
Although primarily written in the UK context, many UK infrastructure assets have been financed by international investors (notably from Australia and Canada). Overseas investors have led the way in developing infrastructure funds and investing directly in infrastructure. The UK government is keen to get similar levels of investment from UK institutional investors into infrastructure projects to help finance long-term economic growth.