Institutional Investing in Infrastructure

April 1, 2019: Vol. 12, Number 4

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From the Current Issue

Infrastructure

Infrastructure funds raise $89.5b in 2018: Asset class grows in popularity

Investor sentiment for infrastructure equity is at record highs, according to UBS’ new report, Top trends in 2019: Infrastructure Outlook. This appetite from infrastructure investors is reflected in the volume of funds raised in 2018 of $89.5 billion, exceeding the previous fundraising record of $73.4 billion set in 2017.

Infrastructure

Interest rates, inflation and infrastructure: Interest rate policy can make or break markets

Slow and steady increases in interest rates have many investors concerned about the impacts rising rates can have on current and future infrastructure assets. If the cost of capital and rates continue to head north, will asset valuations head south? How resilient will revenues and cash flows be?

Infrastructure

Playing defense: The economy has been growing, but investors worry what goes up must come down

At the time of this writing, the U.S. economy had been growing for 117 consecutive months and is on track to break the record held by the 120-month 1990s tech-boom expansion. Everyone knows length, in and of itself, does not necessarily portend an impending downturn — Australia’s economy, for example, experienced 26 years of uninterrupted growth before going into a technical recession in 2017. But it is also not unreasonable for investors to be getting a little nervous. After

Infrastructure

Not all roads are made equal: Interest rate sensitivity in road infrastructure valuations

A variety of different concession structures and subsequent values can be impacted by general economic conditions and interest rate movements. While non–toll road concessions have none, or limited, sensitivity to interest rates, the same cannot be said for free-rate tolling mechanisms.

Infrastructure

Global listed infrastructure report: Essential news and notes

The following report reviews highlights of some of the events and trends affecting global listed infrastructure companies during the past two months. Coverage of the GLIO universe shows a rolling one-year performance (February to February) at 16.1 percent with, the telecom infrastructure (19.5 percent) and utilities (16.4 percent) sectors leading the way.

Infrastructure

Institutions look to allocate more to real assets: Global markets are a priority

Institutional investors are continuing to shift their exposure to real assets. The BlackRock 2019 Global Institutional Rebalancing Survey, a survey of more than 230 institutional clients representing over $7 trillion in investible assets, found that 54 percent of respondents are increasing their allocation to real assets.

Infrastructure

Roundtable: Understanding investor benefits from opportunity-zone funds

Opportunity-zone funds have become the topic of fevered conversations among investors and their investment advisers. But what are the predominant structures for qualified opportunity-zone funds, and what are the benefits to investors?

Infrastructure

New policies drive infrastructure investment in Asia Pacific: Private capital is welcome

For investors and the world, Asia Pacific represents the future in many ways. According to Jones Lang LaSalle’s latest City Momentum Index, for example, 19 of the top 20 most dynamic cities are in Asia Pacific, including six in India and nine in China.

Infrastructure

Average infra fund size continues to grow: While average time on offer falls year over year

The time infrastructure private equity investment funds were on offer had been creeping up over the past four years. In 2018, however, that upward trend saw a dip, as the average time in the market fell from 20.7 months in 2017 to 17.1 months in 2018.

Infrastructure

The canary in the rare earth–metals mine: Investors must decide whether green energy is having its day in the sun or becoming something more durable

Renewable energy, particularly wind and solar, is a popular asset class in the infrastructure investing universe, and rightfully so, given three key factors: 1. Costs keep coming down 2. Subsidies are still in place 3. Governments and utilities are pushing for renewables As 2019 sets up to be another banner year for infrastructure fundraising, the amount of renewable energy deals being done will likely continue to rise, as well. That being said, as an investor-focused publication, we wanted to ask a few uncomfortable questions to hopefully provide deeper insight, and eventually more clarity, and comfort for investors making allocation decisions.