Political and regulatory risk comes with the territory when investing in infrastructure. In many cases, the assets acquired by infrastructure investors may have been until very recently publicly owned. Likewise, given the public service nature of infrastructure, there are certain asset classes such as renewable energy and roads that would not be viable business opportunities without public subsidy and support.
However, despite this understanding, the current actions of governments in Europe and the United States are creating a climate of uncertainty for investment in many sectors and regions. A perfect storm is brewing on both sides of the Atlantic, where financial regulations are being tightened in ways that are expected to make investing more challenging for infrastructure investors (see box on page 7). At the same time, asset-specific regulations, especially in energy markets, are also being changed as a result of environmental concerns and public subsidy cutbacks. Thi