Infrastructure covers a wide range of sectors that provide essential services to citizens, including assets that satisfy the energy, transportation and communication needs of society. Infrastructure can also extend to other industries such as waste and water, healthcare, and other necessities.
Historically, governments around the world were the main investors of infrastructure, and in many places, they still are. However, private capital has become increasingly more important. The trend started in Australia in the 1990s, with the privatization of state- owned infrastructure assets, and has spread across the world to Europe, Canada, the US, and eventually even emerging markets.
Private infrastructure funds have displayed a strong track record in operating infrastructure assets efficiently, often enhancing their performance relative to under state ownership, whilst also satisfying the investment return requirements of their investors. These investment vehicles have therefore become an integral part of the infrastructure ecosystem for many countries around the world.
The next several years will be an exciting time for the infrastructure industry. Governments around the world and their citizens have recognized that infrastructure investments will have an important role to play to drive future economic growth, support decarbonization, and enhance quality of life.
Recent policies such as the US Inflation Reduction Act, the US Bipartisan infrastructure Law and the EU Green Deal have significantly broadened the investable universe for infrastructure investors.
Private infrastructure has gained the reputation of a safe haven that also happens to enjoy secular tailwinds – a rare combination across any investments. With persistent market volatility, economic uncertainties and geopolitical tensions, private infrastructure’s diverse product offering and resilient performance through economic cycles should appeal to most investors.
