Large institutional investors, sovereign wealth funds and pension funds are generally at the forefront of larger investment deals. A case in point is infrastructure projects needing direct investment with capital that can be deployed relatively quickly and for long investment horizons. However, there are other investors, not as large, with less capital and perhaps with fewer resources to source direct investment in infrastructure.
Those smaller investors, with shorter time horizons and liabilities, that don’t want to tie up capital are the ones seeking secondary investments in the infrastructure space. In 2014, total volume of secondaries across all alternatives was about $49.3 billion with about $1.9 billion of that being in infrastructure secondaries, according to Setter Capital in Toronto. Comparatively, about $700 million of infrastructure secondaries closed in 2013.
“Buyers, more and more, are looking at [seco