During the past couple of years there has been an intensifying debate among institutional limited partners (LP) and infrastructure general partners (GP) on the proper investment model for closed-end infrastructure. Limited partners are increasingly taking the position that the “2 and 20” model for fees and carry that seems to have been inherited by these funds from the private equity market is inappropriate and are pushing back.

WHAT IS AN INFRASTRUCTURE FUND?

In this debate there are several basic questions that have not received enough focus: what is an infrastructure fund and what is its risk/return profile? The answers to those questions are not simple and a better understanding of them leads to a more realistic response that we feel limited partners actually endorse.

There are in fact a number of basic infrastructure investment types:

•            Brownfield Investments: Targeting well-established, well-maintained ca