To understand about infrastructure investing, it is better to take each word separately. The first word infrastructure refers to the structure of a construction that could be a public or private owned one, such as the railway or roads or telecommunication. The second word is a very important one in the life of any earning individual – investment; this as all know is the putting in of your money in order that you might get back a bigger sum of money sometime in the future.
This kind of investment can be done by both an individual and a company. The 3i group for instance, the American and Asian office of which is handled by Bob Stefanowski, is an international investment firm that deals primarily in infrastructure investment and private equity as well as debt management. They make investments in economic infrastructures, primary PPP and low-risk energy projects, principally in Europe.
While investing in an infrastructure you have to have patience as it is a long term investment and the returns of some take much longer time than expected. The generation of cash flow in some projects takes a really long time, much more that what you can estimate. It is hence that just like any investment that you may have made, you need to take a close and careful look at the terms and conditions of these infrastructure investments.
In an investment such as this, you money is given to the concerned projects through what is known as “entities”, which are either infrastructure companies or registered managed investment schemes. These are usually listed investments on a public market. You could also select from a small list of unlisted companies and unit trusts; you could deal directly with the entity.
The difference of infrastructure investments with shares can be enumerated as follows:
- This kind of investment can be set only for a set period of time
- Because the infrastructure entities do not have 100% ownership of their asset, they are not totally in control of the same.
- For some projects government regulations have to be maintained.
- It is difficult to compare the infrastructure investments with other because of their uniqueness.
- The investments in unlisted entities are much more liquid as compared to other forms of investment. This means that selling these are rather difficult or even converting them to cash is not a cake walk.
- This is what makes the withdrawal of money when required constrained. Hence it is better to invest in listed entities where you can get access to your funds easily.
No matter what the kind of investment is, some amount of risk is always attached to every type of investment. It is hence that the terms and conditions of every investment should be read and understood very carefully before the investment is made. Consultation should be taken from informed and learned people of this category. Bob Stefanowski is the manager and chairman of a company that specializes in infrastructure investment and it is people like him who know best how and where to invest so as to get the maximum benefit.