Institutional Investment in Infrastructure in Emerging Markets and Developing Economies

This study discusses the role of institutional investors in financing infrastructure in emerging markets and developing economies (EMDEs). It analyses the actual involvement and the future investment potential of new financing sources such as public and private pension funds, insurance companies, and sovereign wealth funds. Investment volumes are currently still low but, nonetheless, interesting practical examples can be found in different countries and projects. International and domestic investors apply a variety of investment approaches in developing countries, using a range of equity, debt and fund instruments. Some lessons can be learnt by policy makers and investors from this overview of experiences to date. There are (more or less) favorable pre-conditions for successful private investor involvement. Different models work in different places, depending on the development stage and the institutional environment. Four different 'leadership models' are described for international and/or domestic investors seeking to spearhead infrastructure investment in EMDEs.