Infrastructure is the largest unlisted asset class globally (USD 5+ trillion AUM in dedicated infrastructure funds). Yet investor access is restricted to large institutional investors writing USD 25-100M+ tickets in closed-end funds. The reasons are structural: infrastructure investments have long durations (15-30 years), significant size (USD 100M-2B+ per project), specialist due diligence requirements, and counterparty risk that requires deep credit analysis. None of these are insurmountable for tokenisation — but they require careful structuring.
The most tokenisation-suitable infrastructure assets are those with contractually defined income streams: toll-road concessions (defined toll tariffs + traffic volume), airport slots (defined landing fees + slot value), power-purchase agreements (defined energy price + offtake commitment), water concessions (defined tariff + minimum usage). The risk profile is largely about counterparty performance and asset-specific operational risk — both quantifiable.
The asset types.
| Asset | Income source | Concession length | Tokenisation fit |
|---|---|---|---|
| Toll-road concession | Tolls × traffic volume | 20-30 years | Strong — well-defined cash flow |
| Airport slot | Landing fees + slot trade value | Indefinite (IATA-recognised) | Strong — regulated, limited supply |
| Power Purchase Agreement (PPA) | Energy sale at contracted price | 15-25 years | Strong — sovereign or utility counterparty |
| Water concession | Water tariff × usage volume | 20-30 years | Good — regulated industry |
| Renewable energy projects | PPA + green attribute revenue | 15-25 years | Strong — increasingly institutional |
| Telecom tower portfolios | Lease income from operators | 10-15 year master leases | Strong — institutional comparable |
The structure.
- Sponsor (existing infrastructure fund / developer / institutional holder) commits the concession asset to a tokenisation programme.
- Concession-Owning SPV: typically the original project company that holds the concession contract with the government counterparty.
- UAE Issuer SPV (DMCC) holds the VARA Cat 1 licence and a beneficial interest in the Concession-Owning SPV (either through equity, debt or layered participation).
- Token issuance: ARVA tokens representing pro-rata interest in the cash flows from the concession.
- Cash flow waterfall: concession income → operating costs → debt service (if any) → reserve funds (maintenance, debt service reserve) → equity distributions → token holders.
The government-consent question.
Most infrastructure concessions include a "change of control" or "transfer-of-economic-interest" clause requiring government consent for material transfers. Tokenising the economic interest in the concession may trigger this clause. The pre-application work includes:
- Reviewing the concession contract for change-of-control triggers.
- Engaging the government counterparty (often the grantor of the concession) for consent or no-objection.
- Structuring the token as an indirect economic interest (e.g. participation interest in the holding SPV) rather than direct equity transfer, which may avoid the trigger.
- Disclosing the consent risk in the whitepaper as a material risk factor.
For airport slots specifically, the relevant authority is typically the airport operator and/or the slot coordinator (e.g. ACL for UK; Airport Coordination Limited equivalents in other markets). Slot value transfer typically requires coordinator approval.
Worked example: USD 200M toll-road concession.
- Sponsor holds a 25-year toll-road concession granted by a sub-sovereign authority (state government or city). Concession has 18 years remaining. Annual gross toll revenue: USD 30M. Annual operating costs + maintenance reserve: USD 8M. Annual net cash flow: USD 22M. Concession PV (10% discount): approximately USD 200M.
- Sponsor reviews concession for change-of-control trigger and obtains state government consent for indirect economic-interest tokenisation through Issuer SPV ownership structure.
- DMCC Issuer SPV established; VARA Cat 1 ARVA issuance licence obtained.
- Issuer SPV subscribes to a 100% beneficial interest in the existing Concession-Owning SPV via a structured holding arrangement.
- Issuer SPV issues 200,000,000 ARVA tokens at USD 1.00 each, raising USD 200M.
- Proceeds deployed to existing sponsor as the concession sale price.
- Ongoing operation: the existing operating team continues to operate the road; cash flows flow to Concession SPV → Issuer SPV → token holders quarterly.
- Token holders receive an annualised 8-10% distribution yield (subject to traffic volume risk) plus participation in any concession-end residual value.
The airport slot variant.
Airport slots are particularly suited to tokenisation — they have indefinite duration (under IATA Worldwide Airport Slot Guidelines), trade in established secondary markets (Heathrow slot trades have reached USD 60-80M per pair), and their value is largely a function of airport capacity scarcity rather than ongoing operational performance. The structure for airport slot tokenisation: airline (or slot holder) assigns the economic interest in the slot to the Issuer SPV; slot continues to be operated by the airline under a slot-operation agreement; token holders receive the economic return (either through periodic distributions if the slot is leased to other airlines, or through capital appreciation as slot scarcity increases).
Conclusion.
Infrastructure tokenisation under VARA Cat 1 ARVA is one of the more institutionally interesting use cases — large addressable market, predictable cash flows, well-precedented institutional asset class. The structural complexity is real (government consent, concession contract review, reserve funding) but the rulebook framework supports the use case. Neo Legal works with infrastructure sponsors across the full tokenisation pathway including the government engagement.
