Institutional Investing in Infrastructure

June 1, 2019: Vol. 12, Number 6

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From the Current Issue


The 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 in recent months. The Global Listed Infrastructure Organisation (GLIO) coverage of core infrastructure companies displays a rolling one-year performance (April to April) at 16.8 percent, with the Energy Transportation Infrastructure (24.1 percent) and Ground Freight (28.3 percent) sectors leading the way for the same period. Long-term USD annualized total return (15 years) for global listed infrastructure is 11.2 percent versus 7.9 percent for global equities. Listed infrastructure achieves this with approximately 300 basis points lower volatility compared against equities.


Ten good years: The attractiveness of infrastructure has only increased over the past decade as a low interest rate environment and long-term returns have overshadowed an expensive equities market

Infrastructure investing has taken a transformative turn over the past decade. Whereas the design, building and maintenance of projects was primarily in the hands of all levels of government (depending on the needs of the project), those projects have moved more into the hands of private investors, especially those of large institutional investors. According to a report by PwC and the Global Infrastructure Investor Association (GIIA), titled, Global Infrastructure Investment: The role of private capital in the delivery of essential assets and services, more than $200 billion has been raised by specialist funds since 2006, with at least the same amount allocated by pension funds and other direct investors.


A roundtable discussion on the state of the infrastructure market: Investors and managers review infrastructure’s ‘necessity trap,’ the transformation of energy markets and more

In New York City in May, IREI hosted its i3 Roundtable Series: Spring 2019 with a cross-section of the institutional infrastructure investment market participants, including U.S. and global pensions, infrastructure investment managers and consultants. The organizations present were First State Investments, Allianz Global Investors, Blackrock, National Real Estate Advisors, QIC Infrastructure, Upper Bay Infrastructure and New Jersey Treasury Office.


The right approach: Investing to renew infrastructure in smaller U.S. cities yields high returns

One of the few areas of agreement in government on both sides of the aisle is that U.S. infrastructure is in a critical state. Where that agreement falls apart is how to pay for it. Government-led programs, whether raising the tax on gas or selling off $1 trillion in federal property, offer hope that lawmakers may be able to engage in constructive dialogue on how to move forward on infrastructure. However, they’re going to need some help from the private sector — which actually has the capital at hand to underwrite the improvements needed.

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