Infrastructure Finance: A Comparative Analysis of Projects With and Without Private Equity Funding

Abstract

The main purpose of this paper is to empirically analyze the characteristics of infrastructure projects which have private equity investments in them. A comprehensive sample of 2821 infrastructure projects (worth US$1.4 trillion) globally from 1990 till 2009 has been examined in this paper. Comparative analysis of projects indicated that those projects with private equity were larger and had more sponsors. There was no significant difference in the debt ratio. Analysis of projects in developed countries showed that projects with private equity were larger and had more sponsors, but showed no significant difference in debt ratio. Projects with private equity investments in developing countries supported significantly lower debt ratios and had more sponsors, but showed no significant difference in project size. Regression analysis indicated that the size of the project was significantly influenced by the presence of private equity. Logistic regression analysis revealed that country risk, year of investment, project structure and project cost increased the probability of private equity investment in an infrastructure project.

Keywords: private equity investments, infrastructure projects, firm characteristics

JEL Classification: G39