What is infrastructure investing?

Assets are called brownfield when they already operate and greenfield when they are built from scratch, which adds construction risk. Strategies run from core, such as regulated utilities with predictable revenue, to value-add and opportunistic, which take on more development and market risk. Some revenues rise with inflation, and because the assets last a long time, some funds are built to hold them for decades.

Say a fund buys a toll road for $500 million under a 30-year concession, and the road earns $40 million a year after running costs. Investors receive what is left of that cash after debt and fees while traffic holds up, and the road is handed back when the concession ends. Simple example. Terms vary by fund.

People need these services in good times and bad, so the income tends to be steadier than most businesses’, but it rests on contracts, regulators and governments that can change.

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