Sovereign wealth funds are an important source of investment capital, particularly for the infrastructure sector. SWFs tend to have long-term investment horizons and often invest in less liquid, alternative assets making them a suitable match for investment in infrastructure projects.
Nearly half (47%) of all sovereign wealth funds are known to invest in the infrastructure asset class. These investors are generally attracted by the long-term nature of infrastructure investments, which match the long-term investment outlook of most SWFs. A further 2% of SWFs are known to be considering infrastructure investment.
Many sovereign wealth funds are large enough in terms of total assets to invest directly in infrastructure projects as well as to make significant commitments to unlisted infrastructure funds. The generally large sizes of infrastructure funds and infrastructure projects suits sovereign wealth funds, many of which have large amounts of capital to commit. This, accompanied by the low-risk profile and long-term nature of the asset class makes it an attractive investment option.
This blog is an excerpt from this month’s Infrastructure Spotlight feature article. To view the whole article, please sign up to Infrastructure Spotlight. Information for the article was taken from the Sovereign Wealth Fund Report.