Fundamentals of infrastructure secondaries

As a less mature private market sector, infrastructure has not always been a major part of the secondaries conversation; however, this is changing as deal volume has grown markedly in the past few years. While specifics of those conversations vary from one LP to the next, they do share a common interest in understanding the fundamentals, which we explore in depth in this whitepaper.

The opportunity

Like other asset classes, infrastructure's secondary market includes two distinct components: LP interest and GP-led deals.

• In an LP interest deal, LPs sell their stakes in private market funds to another investor. LPs may seek to exit their positions owing to reasons including portfolio rebalancing, liquidity requirements and strategic allocation.
• In a GP-led deal, the fund manager initiates a sale to offer liquidity for existing LPs. The GP retains control of the asset(s), which are often transferred to a new vehicle. Existing LPs are typically given the option to either liquidate their position or reinvest. GP-led deals can take many forms, for example, single-asset or portfolio continuation vehicles (CVs), tender offers or strip sales.