As loan finance and government funding become scarcer, pension funds, sovereign funds and family offices are being courted for investments in roads, power plants, hospitals and airports by organisations as varied as multi-lateral agencies and asset managers. At the recent Asian Development Bank meeting in Tashkent, China's vice-minister of finance Li Yong suggested a new instrument for chanelling Asia's savings into regional development, including infrastructure projects. He had in mind a sort of pan-Asian sovereign fund.

Infrastructure is of growing interest to pension funds and other institutional investors because of its long-term predictable cash flows. But a lack of investor expertise is a barrier to attracting investment. Even among these relatively experienced infrastructure investors, actual investments sometimes lag allocations.

Of US$16.2 trillion in global pension fund assets, only about 0.28% is invested in infrastructure, according to a Watson Wyatt survey. In Australia, home to some of the world's most sophisticated infrastructure investors, an average 5% of superannuation fund assets are in infrastructure, with the super funds playing a key role in private fund flows. However, Mercer figures indicate that only 0.7% of UK pension plans invest in infrastructure.

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Posted by mopeng at June 7, 2010 10:03 PM