Tom Skinner, head of research at Dexion Capital, takes a closer look at why investors have been attracted to these contracts and assesses prospects for the sector.
The universe of London-listed investment companies that invest in the equity of Private Finance Initiative (PFI) and Public Private Partnership (PPP) infrastructure projects has expanded significantly over the last few years to reach £3bn. Investors have been attracted by the stability of returns, inflation protection and attractive prospective returns compared to other asset classes within a low interest rate environment. Discount rate The returns from investing in PFI/PPP infrastructure contracts are largely a function of project performance, inflation (revenues are usually inflat...
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