Publications

- May 2011: Vol. 4, Number 5

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It’s All in the Structure: How Managers Craft Infrastructure Deals to Create the Right Value for Investors

by Tyson Freeman

Investors expect infrastructure investments to provide certain performance characteristics — cash yields, low volatility and inflation hedging are some of these — but it is not enough to simply acquire an asset and expect these benefits to flow forth. When setting expectations, investors should understand that how a transaction is structured is as important as buying a good asset in the first place.

Few dealmakers would argue that deal structuring can paper over a poorly understood transaction or a mismatch in a group of stakeholders’ deal objectives. It is a trite, but true, notion that infrastructure deals are like marriages. If you get the match wrong in the beginning, the next 20 years are going to be a struggle. But there is no doubt that thoughtful deal structures can play a significant role in moving infrastructure investments forward and in improving the chances they deliver expected returns.

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