Publications

- January 1, 2021: Vol. 8, Number 1

Gathering momentum: Private capital expected to play big role in the next wave of infrastructure

by Kali Persall

The current economic crisis has revealed the infrastructure asset class is well positioned to deliver long-term income streams for investors, according to UBS’ latest market outlook for 2021 titled Panorama.

In the first nine months of the year, the private infrastructure industry raised $74 billion, putting it on track for a record year. With trillions of dollars of investment required globally in infrastructure projects, private infrastructure — an industry equipped with more than $200 billion of cash reserves — is expected to play a significant role in the next wave of infrastructure investments.

According to UBS, infrastructure investments are particularly appealing during times of public market volatility due to the stability and resiliency built into this market. Infrastructure spending has proven a tried-and-true way to revitalize struggling economies.

“While we have clearly experienced a profound recession and an accompanying bear market, it has not impacted all sectors equally,” said Barry Gill, head of investments at UBS Asset Management. “Many companies are on their knees, but some parts of the economy have actually never had it better, leading to incredible dispersion in equity returns and credit spreads.”

Looking into 2021, UBS reports that the next wave of investments will look a little different than past infrastructure stimulus packages, focusing more on ESG issues, the energy transition and digital transformation. In particular, U.S. President-elect Joe Biden’s policies, such as his $2 trillion climate plan, are expected to support the green energy transition. This plan focuses on green transportation, electricity and building sectors.

Read the full report at this link: https://bit.ly/3g4WvoJ

 

Kali Persall is a reporter at Institutional Real Estate, Inc. and editor of iREOC Connect.

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