Focuses on the needs of
Table of Contents
Preface xi
Acknowledgments xvii
Chapter 1 Infrastructure Demand and Investment Funds 1
An Overview of Infrastructure Demand 2
Availability of Funds 19
Conclusion 26
Chapter 2 Infrastructure Asset Characteristics 27
Defining Asset Classes 28
Portfolio Perspective on Asset Classification 29
Large Up-front Investments 32
Strong Cash Flows 34
Stable Cash Flows 36
Long Life 38
Irreversible Investments 38
Location Specificity 39
Growth Options 39
Value under Default 44
Conclusion 47
Chapter 3 Equity Infrastructure Indexes 49
Infrastructure Investment Options 49
Equity Infrastructure Indexes 51
Macquarie Global Infrastructure Index 54
S&P Global Infrastructure Index 58
CSFB Emerging Markets Infrastructure Index 59
Infrastructure Equity Indexes Correlations 63
Efficient Frontier 65
Conclusion 69
Chapter 4 Debt versus Equity Mode of Investment 71
Theories of Capital Structure 71
Pecking Order Theory 74
Free Cash Flow Theory 76
Trade-off Theory of Capital Structure 78
Governance and Capital Structure 81
Options Approach 82
Private Equity Model of Investing 86
Conclusion 94
Chapter 5 Infrastructure and the Threat of Holdup 95
Transaction Cost Economics 95
Solutions for the Holdup Problem 102
Conclusion 113
Chapter 6 Infrastructure Assets and Political Risk 115
Political Risk Typology 115
Sovereign Holdup 120
Types of Risk 124
Hedging Sovereign Holdup 130
Risk Mitigation Strategies 134
Conclusion 142
Chapter 7 Project Finance and Infrastructure 145
Project Finance Structure 146
Project Finance versus Corporate Finance 147
Ras Laffan Revisited 156
Project Risk Analysis 161
Credit Rating Agencies 165
Using the Project Finance Structure 169
Role of Government 172
Conclusion 175
Chapter 8 Infrastructure Asset Valuation and Bond Returns 177
An Overview of Infrastructure Valuation Theory 178
Basel II and Infrastructure Lending 187
Infrastructure Bond Returns 199
Conclusion 208
Chapter 9 Case Studies 211
Case Study 1: Aguas Argentinas S.A. 211
Case Study 2: Dabhol Power Company 223
Conclusion 230
Conclusion 233
Notes 237
About the Author 253
Index 255
