Performance and Persistence in Private Infrastructure Funds

28 Pages Posted: 8 Dec 2019

See all articles by Martin Haran

Martin Haran

Ulster University

Daniel Lo

Ulster University

Stanimira Milcheva

University College London

Date Written: November 21, 2019


Private infrastructure funds have contributed to about 10% of global infrastructure investment in the last decade, managing $483 bn assets at the end of October 2019 according to Preqin. Given the marked expansion in private funds investing in infrastructure, this paper undertakes a detailed analysis of the key performance drivers. We use fund-level cash flow data to construct various investment performance measures including the internal rate of return (IRR), the public market equivalent (PME) and the total value to paid-in (TVPI). The results show that returns persist strongly within private infrastructure, yet the performance persistence effect weakens with further successor funds which is similar to what has been observed in the wider PE fund industry. In addition, funds that focus on developed markets and invest in green field projects tend to outperform their industry peers. We also observe that the infrastructure private equity market tends to move in tandem with the wider capital market over time in terms of performance. Lastly, the annual IRR seems to be a poor predictor of performance within the unlisted infrastructure fund industry in terms of coefficient of determination. On the other hand, annual PME increases cash flow predictability and affords for a more reliable performance indicator.

Keywords: Private infrastructure funds, performance, persistence, internal rate of return, public market equivalent

JEL Classification: E44

Suggested Citation

Haran, Martin and Lo, Daniel and Milcheva, Stanimira, Performance and Persistence in Private Infrastructure Funds (November 21, 2019). Available at SSRN: or

Martin Haran (Contact Author)

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

University College London ( email )

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

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