A big part of generating consistent returns from infrastructure investing comes down to how deals are sourced, assessed and managed. Aviva Investors has a number of key competitive advantages in this area.

One is the financial strength of Aviva plc and the long-term nature of our investment commitments. This makes us a naturally attractive counterparty for borrowers and vendors.

Another is the in-depth experience of our team.

Aviva Investors retains all strategy, investment decision making and fund management responsibilities in-house and has the resources to do this. Certain aspects of the investment process do involve third parties, such as deal sourcing, due diligence, asset management and operations and maintenance. 



    When it comes to sourcing assets, step one is knowing what’s out there.  We do this in a few ways:

    • Strategic market approach: when a strategy is agreed with the client, the team researches assets that best fit their criteria. It then contacts the players involved in sourcing deals.
    • Active networking: the team maintains regular contact with sponsors and other players to identify opportunities early on and regularly reviews deal databases.
    • Referrals, which come via a wide range of contacts.



    The aim is to maximise returns – we target an IRR of 7% for UK assets – while minimising risk and complexity. 

    Core strategy

    • Purchase the entire capital structure rather than equity tranches. This reduces risk and structural complexity.
    • Concentrate on assets other managers don't focus on to build competitive edge.
    • Focus on areas where we have a competitive advantage by investing repeatedly in certain sectors and look for new sectors to roll out that strategy.
    • Favour fully amortising assets as long-term returns will come from dividends and return of capital rather than capital growth.
    • Transaction sizes of £5m-£100m.


    • We seek assets with the following characteristics:
    • Attractive risk/return profile
    • Long-term income streams
    • Linked to inflation
    • Unleveraged



    Finding an attractive risk/reward profile is a top priority. This requires access to high levels of information and comfort with the capabilities of counterparties involved in the project.

    Opportunities are discussed among team members assigned to the transaction, with input from the wider team encouraged.

    All deals are subject to our proprietary financial models. This is where we test assumptions to see how the project might perform under a variety of variables.

    Key considerations

    These are our key considerations when sourcing and assessing deals:

    • Economic and strategic rationale for the project
    • Sponsor quality
    • Support package
    • Financial structure
    • Construction risks
    • Operating risks
    • Macro-economic risks
    • Market, volume or pricing risks
    • Contractual and regulatory framework



    Since returns are from cash flows of the underlying projects, and because there is no or limited recourse to project sponsors, the risk analysis focuses on cash generation and spending mechanisms and revolve around three key areas: market, project and transaction risks.

    Market risks:

    Regulatory risks

    • Country risks
    • Macro-economic factors
    • Market environment – volume or pricing

    Project risks:

    • Risks with key counterparties
    • Construction-related risks
    • Technology performance
    • Operations performance
    • Contractual and Legal framework
    • Prepayment risk

    Transaction risks:

    • Economic and strategic rationale for the project
    • Quality of sponsors
    • Financial structure
    • Directorship and control



    The infrastructure team prices unleveraged investments using the discounted cash flow method, as the sum of the future cash flows distributed by the underlying assets and companies, and discounted at an expected rate of return, calculated using a financial model:

    • Cash flows are estimated for the investment-holding period using a number of performance-related assumptions.
    • Expected rate of return is determined by reviewing comparable transactions and considering target returns of the fund/mandate.
    • Financial models used to price investments are either built by the infrastructure team, external consultants or obtained from the vendor.
    • Acquisition costs and other expenses considered.



    This is conducted with the assistance of independent external legal, technical, commercial, insurance, model audit and occasionally other advisers (tax and accounting, real estate etc.). It also involves visits to the project and meetings with relevant counterparties. 

    We insure the investment meets our criteria and that the associated documentation includes controls over decision making.


    All the details of the transaction are submitted to the Infrastructure Investment Committee (IIC) for approval.

    The IIC reviews and approves infrastructure transactions and provides governance and oversight to the process. Once approval is received a completion date is finalised with the vendor and a drawdown notice issued to investors. Cash is not retained within the fund other than to provide working capital for administration costs.

    Once the investment is made its performance is carefully monitored throughout its life.

The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested.