As investors around the world will testify, the landscape for infrastructure as an asset class has changed markedly over the last couple of years.
The turbulence of the US and UK elections, Brexit, the changing of the guard at the European Commission and Parliament, Net Zero commitments and of course the global pandemic have all impacted a sector whose characteristics are traditionally built around stability, predictability and low risk. Ironically, it is perhaps because of this unprecedented period of uncertainty that the asset class has proved its worth once again and continues to grow exponentially.
This significant period of change has brought with it a smorgasbord of challenge and opportunity. The focus on decarbonisation and climate resilience is accelerating investor strategies related to current and future portfolios, whilst the world of ‘zoom’ has changed the way we work, probably for good, opening up even more opportunity for the ‘fourth utility’ of telecoms and data. Whilst the unwelcome hit on international travel will take time to recover, the interregnum has perhaps provided the breathing space for aviation to make essential progress on its sustainability agenda.
Yet, as the world spins ever faster, many of the longstanding issues remain. Governments around the world are turning to infrastructure as a key part of their post pandemic economic recovery plans, but in many cases the role of private capital in those plans is not clear. Billions of dry powder remains ready to be deployed to work alongside the public sector if policy makers make the right decisions about funding models and pipelines. Regulators continue to grapple with striking the balance between near term consumer pressure and enabling essential long-term investment. Governments want an ever-increasing slice of the inward foreign investment pie whilst putting in place protectionist policies to enable them to intervene if they don’t like the colour of the money. Treasury officials are under pressure to raise corporate tax revenue to pay down massive public borrowing whilst simultaneously competing as destinations for international capital.
As the membership body for the leading investors in infrastructure, GIIA is engaged with policy makers in the key markets on all these issues, and more. With nearly USD 1trn of infrastructure assets under management, through 1,700 individual assets across 66 countries, GIIA members are analysing the investment environment around the world on a daily basis. In addition to representing the investor viewpoint in our global advocacy programme, we are working in partnership with many of the leading advisors to the sector to bring market insights and thought leadership to our members to help with their understanding of the issues and opportunities ahead.
We are delighted to have been able to work with CMS on this report and hope it brings new insights for our members.
Lawrence Slade, CEO, GIIA
Jon Phillips, Director, Corporate Affairs, GIIA