Infrastructure Investment and the Emerging Role of Institutional Investors: The Case of Pension Funds and Sovereign Wealth Funds

Abstract

The search for innovative means of financing infrastructure has become incessant as the demand pressure and the plethora of evidences observed in the form of increasing infrastructure financing gap, ageing infrastructure, environmental factors, such as climate change, rising quality standards are factors attracting institutional and private sector participation in infrastructure investment. Also, the features of the financial landscape, especially in a financial crisis has further underpinned the significance of looking beyond the present infrastructure need, to a more sustained infrastructure financing scheme anticipated from institutional investors. This paper therefore conceptually investigates the potentials of pension funds and sovereign wealth funds (SWF) in bridging the global infrastructure funding gap. A fundamental findings from the study revealed that institutional investors particularly pension funds and sovereign funds have the capacity to pool enormous resources into the infrastructure market, thus emphatically projecting them as a force to be reckoned with in the global infrastructure investments.

DOI: 10.5901/ajis.2014.v3n1p43