The Subsidy to Infrastructure as an Asset Class

Aleksandar Andonov, Roman Kräussl and Joshua D. Rauh
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Aleksandar Andonov: University of Amsterdam
Joshua D. Rauh: Stanford University, Hoover Institution, and NBER

Research Papers from Stanford University, Graduate School of Business

Abstract: We investigate the characteristics of infrastructure as an asset class from an investment perspective of a limited partner. While non U.S. institutional investors gain exposure to infrastructure assets through a mix of direct investments and private fund vehicles, U.S. investors predominantly invest in infrastructure through private funds. We find that the stream of cash flows delivered by private infrastructure funds to institutional investors is very similar to that delivered by other types of private equity, as reflected by the frequency and amounts of net cash flows. U.S. public pension funds perform worse than other institutional investors in their infrastructure fund investments, although they are exposed to underlying deals with very similar project stage, concession terms, ownership structure, industry, and geographical location. By selecting funds that invest in projects with poor financial performance, U.S. public pension funds have created an implicit subsidy to infrastructure as an asset class, which we estimate within the range of $730 million to $3.16 billion per year depending on the benchmark.

JEL-codes: G11 G23 G28 H54 H75 (search for similar items in EconPapers)
Date: 2018-09
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Citations: View citations in EconPapers (5)

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Related works:
Working Paper: The Subsidy to Infrastructure as an Asset Class (2018)
Working Paper: The subsidy to infrastructure as an asset class (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:stabus:3737

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