Institutional Investor investing in infrastructure Why

Institutional Investor investing in infrastructure

§ Why invest in light rail. § Different ways of Investing in Infrastructure § Long term interests § Advantages of linking ownership with project development § Risks 2

Pension funds are natural infrastructure owners - Returns match long liabilities. - Stable returns - Risk adjusted rewards - Inflation protection - Diversification 3

Different investment styles and options Investment: direct, co-invest, manager, listed Entry: green field, growth and mature Investment style: opportunistic, listed, short term PE, long term PE, buy and hold Value investors objectives: PE–short term optimisation, current cash flow, inflation correlation 4

Incentives and investment horizon 5

PPP with long term ownership PPP model if designed correctly focusing on different parties incentives can give: 1. Disciplined evaluation of project economy. 2. Innovation in project design and construction. 3. Innovation in project expansion and the surrounding next works. 4. Innovation in operation and maintenance. 5. PPP savings – project cost, funding and timing, 6

Risks and influence on returns: Risks that needs to be evaluated and has influence on returns: - Political risk - Frameworks conditions - ”revenue” volatility - technology - Incentives and alignment (partners and managers) 7

why light rail ? 8