A Thillai Rajan

Private financing of infrastructure projects is commonly seen in many countries today. In recent years, many private infrastructure projects have also attracted investment from Private Equity (PE) firms. Though there have been instances of PE investment in infrastructure even in the past, the growth has been substantial in recent years. This paper analyses the role of PE investments in infrastructure financing. The findings are based on an analysis of 2821 infrastructure projects that were announced during 1990-2009. It was found that projects with PE investment were larger when compared to projects that did not have PE investment, indicating that that PE investment helped in successfully financing larger projects. Our analysis also indicated that PE investment in infrastructure is more frequently seen in developed countries as compared to developing countries. In developing countries, the number of sponsors is higher in projects with PE investment without any corresponding increase in project size. This indicates that PE investors have helped in sharing the project risk among a larger group of investors, thereby reducing the risk faced by the individual sponsors. © 2011 Elsevier Ltd.

Subject area: Infrastructure finance. Study level/applicability: II MBA/Executive MBA (Project Finance, Infrastructure Finance). Case overview: It is generally believed that the economy of India is on the threshold of achieving significant growth in the coming years. The availability of adequate infrastructure facility will play a key role in realizing this growth potential. To accelerate the process of creating infrastructure capacity, the Government of India has opened up many infrastructure sectors for private sector investment. Creation of international standard airport facilities is an important component of such new infrastructure creation. This case study presents the initial development and financing closure of Bengaluru International Airport Limited (BIAL), the first major private sector airport in India. In retrospect, it is generally felt that BIAL was an important milestone in the privatization of airports in India. The blueprint for the greenfield PPP airport in Hyderabad was closely modelled on the BIAL project. The experience gained in the development of BIAL also played a major role in subsequent brownfield PPP airport expansion projects in Mumbai and Delhi. Expected learning outcomes: The goal of this case study is to illustrate the complexities that exist in the process of infrastructure development and financing. This following are the expected learning outcomes: The importance of using an appropriate project structure. The prevalence of early returns to project sponsors as compared to lenders. The process of achieving financial closure. Analyzing project risks and returns. Supplementary materials: Teaching notes.

Developing countries have been increasingly adopting the Private Sector Participation (PSP) model in the delivery of electricity, telecom and water services. The results from individual studies on the impact of PSP has been mixed. This systematic review synthesizes the evidence on access and quality of services as a result of PSP. Though count of evidence approach shows that PSP is associated with positive impact on outcomes, not all of that can be attributed to PSP. The strength of positive evidence also varies between sectors and outcomes and is strongest for those outcomes where there could be a strong corresponding benefit to the private sector. Narrative synthesis indicated that (i) there are potential trade-offs between different outcomes; (ii) PSP should be accompanied by appropriate regulation, sector reform, and organizational changes to achieve the desired outcomes; (iii) In the absence of specific measures, access to rural and poor areas are adversely affected; and (iv) Unless properly designed, short term focus could dominate long term investment for network expansion and improvement. © 2013 Elsevier Ltd.