Performance and Persistence in Private Equity Infrastructure Funds

40 Pages Posted: 14 Feb 2019

See all articles by Martin Haran

Martin Haran

Ulster University

Daniel Lo

Ulster University

Stanimira Milcheva

University College London

Date Written: February 5, 2019


Private Equity Infrastructure Funds (PEIFs) have played an increasingly prominent role in facilitating institutional investment into infrastructure projects over the course of the last decade. In the post-GFC period, circa 10% of global infrastructure investment has been channeled into direct infrastructure via such vehicles. The unlisted infrastructure assets under management stood at $373bn at the end of December 2017 (Preqin, 2018). In spite of the marked expansion in PEIFs, there has been no rigorous evidence-based academic research analysing the performance characteristics of unlisted infrastructure funds. This paper uses individual funds’ cash flow data from Preqin to construct three measures of performance – the internal rate of return (IRR), a multiple of the total value to paid-in capital (TVPI), and a public market equivalent (PME). Similar to previous studies on private equity, the results show that the IRR does is not a good guide for explaining cash flows within the unlisted infrastructure fund industry. This can be attributed to the irregularities in cash flow timings (or reported timings ) as well as the impact that net asset value (NAV) inflation/deflation has on IRR. Using PME instead increases cash flow predictability and affords a more robust performance indicator - particularly when funds have closed but have not liquidated. Controlling for a host of fund-level variables and fixed effects, the results show that follow-on funds outperform new market entrants suggesting a momentum and learning effect in fund manager’s performance. This finding can be explained by the limited investment opportunities in the public infrastructure space as well as fund managers with multiple funds under management being able to draw upon existing networks and experience. We also find that returns persist strongly across immediate successor funds at fund manager level. However, persistence levels weaken between the initial fund and follow-up funds which are not the immediate successor - similar to what has been observed in the unlisted fund industry. Our results demonstrate that the capacity of PEIFs to raise capital is enhanced when infrastructure funds are outperforming other asset classes consistent with general literature. It is in particular the larger funds that exhibit a greater propensity to attract capital.

Keywords: private equity infrastructure funds, performance, internal rate of return, public market equivalent, multiples, persistence

JEL Classification: G24

Suggested Citation

Haran, Martin and Lo, Daniel and Milcheva, Stanimira, Performance and Persistence in Private Equity Infrastructure Funds (February 5, 2019). Available at SSRN: or

Martin Haran

Ulster University ( email )

Northland Road
Londonderry, BT48 7JL
Northern Ireland

Daniel Lo

Ulster University ( email )

Shore Rd, Newtownabbey
Newtownabbey, Northern Ireland BT37 0QB
United Kingdom

Stanimira Milcheva (Contact Author)

University College London ( email )

1-19 Torrington Place
Department of Construction and Project Management
London, London WC1E 7HB
United Kingdom

Register to save articles to
your library


Paper statistics

Abstract Views
PlumX Metrics