Institutional infrastructure investment, similar to most other investment types, is in the midst of a cyclical and potentially secular shift. Many managers see great opportunity and want to move quickly to take advantage, but some investors, especially those new to the market, are wary of an immature asset class that has seen its share of busted funds and firms, and want to move more slowly. Somewhere in-between a middle ground can probably be established.

As divisive as they are alliterative, public-private partnerships (P3s) combine public need with private expertise or investment, helping governments combat the global recession and finance numerous infrastructure improvements around the world. P3s have become an increasingly common financing mechanism for many types of urban infrastructure, including transportation systems, communication networks, energy grids, water and wastewater treatment plants, and social infrastructure assets.

The question whether infrastructure is a separate asset class, real estate, private equity or a mixture of the three has been discussed in corporate board rooms as well as academia. Although there exist numerous broad and narrow definitions, the benefits and limitations of infrastructure in the overall asset allocation of “conservative” investors often remains opaque. This article focuses on the experiences of a conservative investor in this relatively young segment and the corresponding investment strategy.