- November 1, 2013: Vol. 6, Number 10

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Lessons learned: The past six years in infrastructure investment have been educational, and that should not be lost on investors

by Enrique Fuentes and Wael Elkhouly


Growing interest in infrastructure investing coincided with the run-up to the global financial crisis in the years 2003 to 2008, and in the calamity that followed many investors learned lessons about the infrastructure asset class the hard way — through write-downs, broken deals, inflated prices, the list goes on. However difficult this experience was for many investors, it should be more than a bad memory.

When looking retrospectively at why the infrastructure market failed to deliver the low-risk investments that this asset class has promised and should be able to produce, a number of issues influencing the way infrastructure investments were made come to mind, including:

•            Capital was mis-incentivized: Many managers adopted a transaction-driven business model in which managers had conflicts of interest and were incentivized to do deals from which they were deriving ancillary revenues from advisory, provision o

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