Infrastructure Secondaries: Bridging the Gap
Executive summary:
- Infrastructure can provide predictable contracted cash flows and inflation protection via essential hard assets, resulting in low-friction costs associated with transacting in the secondary market.
- The long-lived nature and capital intensity of infrastructure assets makes it ideally suited for the secondary market.
- Infrastructure secondaries can bridge a gap in private markets portfolios, which appeals to both GPs and LPs alike.
Looking for a riveting conversation on long-lived assets, contracted cash flows, barriers to entry and pricing power? Hamilton Lane’s infrastructure team can deliver. Looking to discuss one of the fastest-growing sub-segments within private markets? Our infrastructure team can deliver that too.
No, our head isn’t in the clouds (of data centers, naturally). However, we are excited about the vast and rapidly expanding opportunity set that we’re transacting on in the secondary market, a market primed for continued growth amidst increased secondaries adoption and growth in infrastructure AUM.
Infrastructure AUM
Infrastructure + Secondaries: Seasoned assets, accelerated returns
What’s so appealing about secondhand infrastructure? Infrastructure is particularly well-suited for secondaries given long-lived assets are commonly misaligned with investor horizons. The asset class that prides itself in providing predictable contracted cash flows and inflation protection via essential hard assets has lived up to this promise, resulting in low-friction costs associated with transacting in the secondary market. This is evidenced by relatively resilient and strong observed valuations for infrastructure secondaries relative to other asset classes, as shown below.
Secondary Pricing
% of RD NAV
Beyond the generic premise of secondaries providing access to seasoned assets, and thereby accelerated liquidity, secondaries can offer superior returns versus primary investing, discounts aside. Leveraging our proprietary data on infrastructure fund performance, we observe that investors would achieve such performance by acquiring a fund interest at an inflection point for value creation, which generally occurs once a fund is substantially invested (approximately 2 – 4 years into a fund’s life in most instances).
Additionally, secondary buyers benefit from the ability to underwrite an in-place portfolio of assets at a time in which some degree of de-risking may have occurred, presenting the potential paradox of achieving more attractive returns while assuming less risk. It's a paradox we can get behind, and our firsthand experience has been rewarding.
Quarterly Value Growth (%) in a Fund's Lifecycle
By Quarter
GP-led secondaries provide additional runway
Beyond LP secondaries, we see a robust and attractive landscape for GP-led infrastructure transactions. It's a market that GPs are increasingly embracing as they see value in continuing to hold high-performing investments for longer and to continue to support high-growth, capital intensive businesses with capital requirements exceeding capital availability or sizing limitations within existing vehicles. The long-lived nature and capital intensity of the asset class makes it ideally suited for the secondary market.
Although we may periodically see examples of the secondary market being tapped in response to being unable to sell lower-quality assets in the open market, this has become the exception as the market has developed, with an ever-increasing opportunity set for buyers to consider. More often than not, the opposite holds, with GPs entertaining secondary transactions involving their most prized assets with continued room to run.
All roads point to infrastructure secondaries
Although the market for secondhand infrastructure has come a long way in recent years, we see favorable competitive dynamics in this relatively nascent market. Despite significant growth, the market remains fragmented, with few dedicated buyers and particularly favorable competitive and pricing dynamics in the middle market.
Case-in-point: the pricing for recent vintage funds overseen by blue-chip infrastructure GPs. In most cases, such exposure would see narrow bid dispersion in a competitive process (and we probably wouldn’t be far off by venturing a guess in the 90s). However, we have been able to unlock substantial value in the middle market by investing with highly capable, albeit lesser known, sector specialists via a proactive and hands-on approach to sourcing, underwriting and execution.
In a market that has consistently traded close to par, we have been able to average double-digit discounts without sacrificing quality. Although all roads point to infrastructure, we’ve found transaction dynamics to be most favorable in these less trafficked parts of the market.
We provide further insights and observations across infrastructure in our 2025 Infrastructure Market Overview. Please complete the form below to receive an emailed copy of the report.
Corporate Finance/Buyout – Any PM fund that generally takes control position by buying a company.
VC/Growth – Includes all funds with a strategy of venture capital or growth equity.
Real Estate – Any closed-end fund that primarily invests in non-core real estate, excluding separate accounts and joint ventures.
Secondary FoF – A fund that purchases existing stakes in private equity funds on the secondary market.
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