Traditionally, the IRR and multiple have been used to measure the performance of unlisted infrastructure funds. Preqin has developed an additional method for measuring infrastructure performance across all vintage years, the PrEQIn Infrastructure Index, which captures in an index the returns earned by investors on average in their infrastructure portfolios, based on the actual amount of money invested in infrastructure partnerships. Comparing this with other PrEQIn indices provides a better insight in to the performance of the asset class relative to other strategies.
The PrEQIn Infrastructure Index and the PrEQIn All Private Equity Index are calculated on a quarterly basis using data from Preqin’s Infrastructure Online and Performance Analyst online services. The infrastructure index uses quarterly cash flow transactions and NAVs reported for 148 individual unlisted infrastructure partnerships, while the All Private Equity Index uses quarterly cash flow transactions and NAVs reported for over 7,300 partnerships which have raised aggregate capital worth over $4.0tn.
By rebasing each index to 100 as of 31 Dec 2007, we can examine the performance of unlisted infrastructure funds in comparison to private equity since the financial crisis. The infrastructure index is not initially affected by the adverse financial conditions at the time and climbs over the first three quarters of 2008, before falling quarter on quarter; reaching a low of 93.7 in Q3 2009. In comparison, the private equity index is affected more immediately at the onset of the market turmoil of 2008, beginning its descent in Q1 2008 to a low point of 73.3, two quarters prior to the lowest point for infrastructure.
Both indices have steadily increased over the intervening quarters, with infrastructure outperforming private equity. As of 30 September 2013, the PrEQIn All Private Equity Index stands at 125.4, whereas the PrEQIn Infrastructure index stands 17.9 points above at 143.3.