The spread of the novel coronavirus disease COVID-19 is bringing the first real test of the resilience of infrastructure. There will be clear distinction between assets that have strong defensive characteristics and those that do not, giving force to arguments about “private equity in infrastructure’s clothing,” said Bfinance, a U.K. advisory firm, in its private market report.
Many assets, particularly those underpinned by strong contractual cashflows, will be unaffected by disruption. Many unlisted equity funds are well diversified across sectors, and Bfinance expects fund revaluations to be relatively modest, though these will require scrutiny. Expect winners and losers to emerge as the receding tide reveals weaker underwriting practices, overoptimistic business plans and aggressive use of leverage.
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