Asia’s infrastructure needs have long attracted interest from private equity firms and other investors; but according to a lengthy article in FinanceAsia, drawn-out development and construction timeframes along with eroding returns have prompted some investors to look at smaller projects, particularly in energy.
Greg Karpinski, the co-head of energy, resources and infrastructure at SCB Principal Finance, a unit of Standard Chartered Bank, told FinanceAsia that there is a growing interest in smaller infrastructure investments. His firm is now targeting projects of less than $500 million, where they are able to make equity investments of $20 million to $200 million.
Investors and advisers also said that while large-scale infrastructure investments deliver returns on equity of 9% to 14% (falling to the lower end of that range in recent years due to the worsening economic climate), smaller infrastructure returns can be 15% and higher. These returns are driven in part by increased cash flow and the technical risks associated with smaller projects that use non-conventional fuels and technology.
To read the whole article, Investors rethink as infrastructure returns shrink, go to the website of FinanceAsia.
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