Untangling unlisted assets
The balance sheet of unlisted assets
Infrastructure investments provide capital to develop or maintain assets which are essential services or facilities such as airports, toll roads, ports, telecommunications, water, sewer and electricity services. These assets are considered essential services in developed countries and can improve the standard of living and the economic potential of developing countries. Infrastructure projects often rely on substantial upfront investments. Infrastructure funds generally offer higher risk and return expectations than private credit funds, but lower than private equity funds.
Real estate investments involve the direct acquisition of real estate assets such as residential properties, shopping centers, office buildings, industrial parks and distribution centers. Returns include both income generated from rental yields and capital appreciation due to demand dynamics and asset improvement / development. The return and risk expectations for real estate funds vary widely, from basic opportunistic assets to higher yielding assets, due to the great diversity of strategies globally.
Private equity investments providing capital to private companies that are neither listed nor listed. The most common categories of private equity include venture capital, development capital, and leveraged buyouts. Private equity investments require specialized fund managers to identify and pursue investment opportunities, and then generate capital appreciation through governance, financial and operational management. Many global tech companies, including WhatsApp, Facebook, Twitter and Snapchat, have been identified and invested at the venture capital stage by funds that operate in this space.
Private debt is a broad term that describes lower quality debt, such as business loans, infrastructure debt, and real estate debt. These funds are generally income generating in nature and have the ability to meet performance targets based on the ability of the fund managers to ensure that the underlying borrowers repay their principal and interest as agreed.