The government stimulus packages issued in response to the global financial crisis have delayed privatisations of infrastructure assets, worsening the already scarce supply in the sector, according to Colonial First State Global Asset Management (CFSGAM).

As a result, infrastructure companies have been hampered in their growth, which in turn has weighed on the returns of sector funds.

"It is a good and a bad thing, the stimulus. Some of our companies were awarded with stimulus funding, so they were able to go and build a new electricity transmission [hub] or a new road on the back of government funding," CFSGAM head of global listed infrastructure Peter Meany said.

"But on the whole it actually turned out to be a negative and the reason for that is many municipal governments were provided with emergency funding, so the potential for privatisation was pushed back a number of years.

"You have state and local governments under serious pressure and we were expecting them to sell some of their assets to the private sector. That didn't happen."

But Meany also said the growing interest of pension funds in infrastructure could restore some of the sector's growth momentum, and pointed to the recent bid from Canadian Pension Plan's investment manager for Intoll as a sign of merger and acquisition activity picking up.

"I think you will see a series of those transactions," he said.

"You've got pension funds who are allocating more significantly to infrastructure and that has only started. While in Australia the allocation to infrastructure is quite high, in the US and Europe it is next to nothing.

"You see CalPERS [California Public Employees' Retirement System, the largest public pension fund in the US] starting to allocate towards infrastructure. You are talking of billions of dollars coming into this space.

"I think you will see over the next 12 to 18 months a lot of 'take privates' as these pension funds try to get hold of the assets."

Meany runs the Global Listed Infrastructure Securties Fund with CFSGAM portfolio manager Andrew Greenup.

He said the fund had held up well and inflows were returning.

In the past 12 months the fund attracted more than $100 million in inflows, of which $85 million came from Mercer.

As investors are rediscovering infrastructure as an asset class, the demand for products on either side of the risk spectrum has been growing.

"We are seeing some interest in infrastructure in emerging markets," Meany said.

That demand was mainly based on the expectations of higher growth in Asian economies, but those investments also came with higher risk, he said.

"It is something that you have to be very careful with. The political and regulatory environments in emerging markets are far less understood," he said.

"I think it is very important that investors understand that an emerging market infrastructure fund is not low risk; it is a thematic growth story.

"Something we are looking at, at the moment, is if we could provide a higher risk, higher return for those investors that have a longer investment horizon and are looking for growth."

But there is also demand for lower risk strategies that invest in infrastructure debt.

"As a house, we are looking for solutions for institutional clients where we bring together our direct infrastructure listed and infrastructure debt capabilities," Meany said.

"The question is: 'If the IRR (internal rate of return) I'm getting on infrastructure is only 9 per cent, should I be better off buying the debt at 8 per cent?' So I'm taking far less risk, but a pretty close return outcome.

"There is definitely demand from the institutional investor to get exposure to the assets. It could be bonds, convertible bonds, mezzanine debt, a whole range of [instruments]."

Meany did not want to give a time frame for either product, but said discussions were already being held for individual mandates.

"On the institutional side we are already talking to investors," he said.