The primary concern today, when it comes to core infrastructure secondaries, is the valuation gap between sellers’ expectations and buyers’ required return. Core infrastructure assets are long-duration, yield-oriented investments that are expected to generate stable and predictable returns. However, in the current rate environment, most buyers are underwriting to higher return thresholds than many sellers are willing to accept.
In the secondary market, most mainstream infrastructure secondary investors are typically targeting mid-teen gross returns before their own fees and carried interest. As a result, they tend to focus more on core-plus or value-added strategies, where return profiles are more aligned with those targets. Core infrastructure, by contrast, often offers lower-risk, lower-return and longer-duration profiles, which can create a mismatch with the life and liquidity profile of closed-end secondary funds.
Having said that, we typically find there a
