Institutional Investing in Infrastructure

June 1, 2019: Vol. 12, Number 6

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From the Current Issue

Infrastructure

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.

Infrastructure

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.

Infrastructure

A conversation with Simon Whistler: with Drew Campbell

Simon Whistler is senior manager, real assets, with the United Nations Principles for Responsible Investment team. Drew Campbell, senior editor of i3, and Whistler discussed the UN PRI, its principles and the most recent round of signatory commitments in 2019.

Infrastructure

Emerging trends in infrastructure: The advance of data and technology is presenting opportunities for infrastructure owners, operators, developers and investors

Technological change may see emerging markets leapfrog the mature markets. There are numerous examples of jurisdictions — such as India, Egypt and Malaysia — that, unencumbered by legacy assets and outdated regulation, are rapidly moving forward with the adoption of new technologies.

Infrastructure

Sending out an S.O.S.: Midstream energy investors face difficult decisions in a changing energy environment

Midstream energy assets and businesses have been one of the most popular sectors for infrastructure investors. But as ESG priorities continue to be integrated into infrastructure investment portfolios and the wider infrastructure market, legacy assets that don’t measure up to these standards are at risk of becoming stranded.

Infrastructure

Refinancing projects and pre-hedging financial market risks: Decisions made now can pay dividends later

While the amount of dry powder ready to invest in infrastructure assets piles up, putting money to work is proving to be somewhat of a challenge. The infrastructure investor community has seen some significant competition on all fronts.

Infrastructure

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.

Infrastructure

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.

Infrastructure

Come together, right now: P3 infrastructure investment holds promise for a better world

Wherever you look around the world, the clamor for increased spending on critical infrastructure has reached an inflection point. In developed markets, aging infrastructures are in need of repair, while many emerging nations and governments are beginning to recognize repairing and constructing infrastructure will help support their pace of economic growth.