Pantheon Ventures, one of the world’s largest primary and secondary investors in private equity, is developing plans for an infrastructure business, expected to launch later this year.
A spokeswoman for the firm declined to comment. A source familiar with the firm’s intentions said it would in time become a fully-fledged strategy to sit along side its private equity business.
It is not clear yet how much the firm, part of US group Russell Investments, plans to raise for this new strategy. It has $22.6 billion in assets under management.
Infrastructure investment is booming. At the end of March this year, Standard and Poors estimated there were 75 infrastructure companies in 23 countries valued at approximately $1.4 trillion.
It is increasingly a destination for investor capital. Last month The California State Teachers’ Retirement System (CalSTRS) said it was considering allocating $1 billion (€642 million) to infrastructure.
Outlining the plans in a policy paper, the US’ second largest public pension fund said it would consider investments in the growing asset class as part of a new fixed assets financing program.
An ever-growing number of private equity firms are investing in infrastructure deals and setting up specific funds. 3i, the FTSE-quoted private equity firm, has an infrastructure affiliate, which recently raised fresh capital to keep pace with its investment opportunities.
Accountant Ernst & Young’s Global Real Estate Center estimates that private sources could account for 10 percent to 15 percent or $240 billion to $360 billion of the capital needed for infrastructure projects annually worldwide.
The drivers include the need for new development and redevelopment of inferior infrastructure networks, while globalisation forces governments to provide the infrastructure necessary to drive productivity and economic growth. This is coupled with population growth and increased urbanisation.
Private sector financing of government-operated assets will continue to proliferate as an effective way to close spending gaps and improve efficiency.