Infrastructure Fund

Another interesting article on infrastructure funds is seen on WSJ.com. To put it short, infrastructure funds have been faced up with the liquidity crunch and remarkably bad share performance. Infrastructure funds remind us of Babcock & Brown and Macquarie, which have bought infrastructure facilities from electric power plants to airports to toll roads globally. A success in these business model is based upon publicly listed funds, where funds are not worried about the redemption of equities "as long as they can roll over their debts." This is true of J-REIT and J-REIT has a similar problems now.

Nobody had predicted such a large-scaled credit turmoil would come to the market; instead, the business model of such listed infrastructure funds had attracted many investors around the globe. Now, everyone understands that such a business model is weak under the current market environment. Whatever people call, leveraged equity business itself can work, only when the debt finance is readily available. Otherwise, it enters into a vicious circle.