Private infrastructure has matured into a well-established asset class providing lower volatility, a partial infl ation hedge, annual yield and attractive long-term returns relative to other asset classes. However, increased competition for assets in developed economies has placed downward pressure on returns. As a result, some private infrastructure investors are now considering opportunities in emerging markets to capitalize on the strong growth prospects that many of these markets offer.
Currently, penetration by investment managers is signifi cantly lower in these regions, due to cultural and linguistic barriers, as well as a lack of local market knowledge. For example, Asia-focused funds account for approximately 14% of private infrastructure dry powder globally, compared with 77% for North America and Europe. Lower competition for assets in emerging markets, combined with a strong demand for capital, should create a favourable environment for capital deployment in the coming years.
Source : Preqin