More than Bricks and Mortar
Infrastructure as Asset Class: A Critical Look at Private Equity Infrastructure Funds

National governments, multilateral development banks and the leaders of the Group of 20 major economies (G20) have all announced their support for major infrastructure development initiatives -- roads, transport, energy generation.

Far from signaling a retreat from neoliberalism or a renewal of state commitment to development, these initiatives are geared to constructing the subsidies, fiscal incentives, capital markets, regulatory regimes and other support systems needed to transform 'infrastructure' into an asset class from which new investment vehicles (notably private equity funds) are seeking above-average profits (typically annual returns of 10-12 per cent).

Viewed as an asset class, infrastructure has political and economic consequences that go beyond the immediate social and environmental impacts of the projects that are built. The increased financialisation of the infrastructure sector has profound implications for what is funded (and what is not) and who gets to benefit (and who does not).

In the energy sector, infrastructure-as-asset-class is hindering a transition away from fossil fuels. Strategies that civil society has developed to hold infrastructure developers to account and to ensure positive outcomes from specific projects -- such as safeguards and standards -- are not keeping up with these swiftly-evolving new realities.

This briefing looks at the growing role of private equity infrastructure funds in financing infrastructure in developing countries. It documents the growth of private sector involvement in infrastructure and its harnessing of state power. It looks at how the financing of infrastructure has been transformed into a platform for profit-seeking in multiple markets using multiple financial instruments. It details the growing number of public funds -- pension funds, Sovereign Wealth Funds, bilateral and multilateral development finance institutions -- that now back private equity funds, effectively acting as private sector financial vehicles. It provides an overview of the wider political and economic impacts of private equity investment. And it concludes with some ideas about how the financialisation of development, with its adverse consequences for the public good, might be challenged, aiming to spark more public debate on the increasing connnections between infrastructure funding and international markets.

An Annex lists over 350 private equity funds, some of the infrastructure-related investments they are reported to have made, the involvement of state/public money in such funds or their projects, and the links with offshore tax havens.