Infrastructure can prove difficult to define, especially when you try to base a definition on the types of facilities that make up the asset class. A better approach for investors is to be clear on the types of returns they are seeking.

What is infrastructure? The answer if you are, for example, a civil engineer, might be pretty straightforward; infrastructure is the term for those structures that underpin civilization, the things we cannot do without — water treatment works, power stations, waste disposal facilities, roads and railways.

However, when you put the same question to four infrastructure fund managers, you may well receive five or six answers.

The following article is an excerpt from Private Infrastructure Finance and Investment in Europe,a report commissioned by the European Investment Bank. The entire report with footnotes and references is available at Inderst Advisory and the Social Science Research Network page.

Private capital is provided to infrastructure projects in two main forms: corporate finance (operating or service companies operating in infrastructure sectors) and project finance, a contractual financing arrangement that is particularly important in infrastructure.

I’ve spent the past two weeks talking to infrastructure investment managers and investors in both the United States and the United Kingdom. Despite being separated by a large body of water — and a common language — some common sentiments emerged.