The infrastructure investment market has evolved in two key ways: (1) It has attracted a great deal of capital, causing many managers to have large fund sizes that seek larger and larger companies to invest in, and (2) investors have grown more sophisticated and deliberate about how they invest strategically in infrastructure. These axes of evolution support a rationale for targeting the lower-middle market, according to Ross Posner, managing partner of Ridgewood Infrastructure.
In an interview published in the November issue of Institutional Investment in Infrastructure, Posner says, “Structural inefficiencies in this smaller segment of the market form the backdrop of a highly compelling investment opportunity. Approximately 40 percent of infrastructure transactions require less than $150 million of equity, and yet only 10 percent of the capital that has been raised is focused on these relatively smaller investments,” continues Posner. “The lower-middle marke