Listed Infrastructure Funds: Funding and Financial Management

Abstract

The financial management practices of Infrastructure Funds listed on the ASX have been subject to substantial criticism, particularly in the light of the extremely poor performance of many of the funds in the current financial crisis. It is argued here that some of the practices commonly criticized can be consistent with principles of good financial management - although actual practice has involved deviations from those principles. Since the listed infrastructure fund model is an innovation with many good characteristics, it is important that the failings exposed by the current crisis be correctly identified such that improvements to the model can be effected through better regulation, governance and market discipline.

Keywords: infrastructure funds, leverage, asset revaluation, stapled securities

JEL Classification: G23, G32, G35