Strength in numbers

More LPs are joining investor clubs to increase their say in investment decision making

by Sheila Hopkins

When confronted with an unfamiliar situation, it is natural to fall back on routines and processes that have worked in similar situations. So it has been with infrastructure.

Infrastructure assets look a lot like real estate assets — physical properties with leases — and thus the investment class has grown up around a private-equity real estate model, with fund managers raising capital from investors, investing it into assets, charging private-equity-type fees for the management and investment of the capital, and then seeking to capture their contracted performance bonuses by liquidating the fund in five to seven years. This process has worked well for real estate, so it seems it should work for infrastructure.

The problem is that infrastructure may be similar, but it is not the same as real estate. It is c