Topic hub
Infrastructure
Infrastructure investing is owning or lending to long-lived physical assets and networks that deliver essential services, such as transport, energy, water and communications. This hub covers infrastructure strategies, the structures and contracts through which projects are built and operated, and how they are financed.
Strategies start with core infrastructure and infrastructure debt. Structures and contracts cover the public-private partnership and the joint venture. Financing covers project finance and the debt service coverage ratio lenders use to size it.
Not in this hub: Real estate, which has its own hub, listed infrastructure shares, and natural resources such as farmland, timberland and mineral rights. General lending mechanics are in Private credit.
Reference index
Definition:
Infrastructure Investing — Infrastructure investing is owning or lending to long-lived physical assets and networks that deliver essential services, such as transport, energy, water, communications and social facilities, whose revenue is usually set by regulation, long-term contracts or government concessions.
Strategies
1 concept- Core Infrastructure
Core infrastructure is the infrastructure equity strategy that market participants treat as lowest risk: operating assets with regulated or long-term contracted revenue, moderate leverage and returns expected mainly from cash yield rather than growth or exit gains.
Structures and contracts
1 concept- Public-Private Partnership (PPP)
A public-private partnership (PPP) is a long-term contract under which a private party provides a public asset or service, usually designing, building, financing and operating or maintaining it, bears significant risk and management responsibility, and is paid according to performance.
Financing and revenue risk
2 concepts- Project Finance
Project finance is the financing of a single ring-fenced asset through a special-purpose company whose lenders are repaid only, or mainly, from that asset's own cash flows and contracts, with limited or no recourse to the sponsors.
- Debt Service Coverage Ratio (DSCR)
The debt service coverage ratio (DSCR) is the ratio of cash flow available for debt service to scheduled interest and principal in the same period, showing whether an asset or borrower can meet its loan payments from operating cash flow.