“There is a significant amount of capital to be deployed over the coming years”
The pandemic has underscored the resilience of infrastructure as an asset class for the second time since the global financial crisis. Because of this, the investment infrastructure sector has seen huge change and disruption but significantly, the macro trends from previous years are now restabilising:
- The shift away from carbon intensive assets towards cleaner energy assets.
- The increased appetite for digital infrastructure assets that has risen from the capital deployment into digital and data infrastructure. The increased consumption of video content, the advent of 5G, the replacement of copper with fibre optic cables all contribute to a once in a generation of data infrastructure and investment upgrades of around $1 trillion over the next 5 years.
- Established managers continuing to raise ever-larger funds.
- New products facilitating how managers think about addressing relevant markets.
- Investors continuing to enhance direct investment capabilities, for example pension funds and sovereign wealth funds.
- Expanding global reach to Asia and North America from Europe.
- Asset competition driving behaviours such as reaching out into areas where traditionally private assets were strong.
In addition to these trends, COVID-19 has brought to the forefront two new trends in the sector:
- ESG has become supercharged, particularly as infrastructure investing is seen as a key player in the post-COVID-19 recovery.
- Forward planning to consider how infrastructure investment and capital that’s available can be part of longer-term transitions – for example, how can the resources from energy transition and digitisation be put to work to support wider macro trends?