Who Are The Best Investment Managers for Infrastructure?

Whilst Real Estate markets globally face both headwinds and tailwinds, professional investor conversations about Infrastructure Investing are taking a different tone. With interest spanning equity and debt.

The infrastructure story is not new: Long life assets that provide a stable inflation linked stable income source. Nor is the need for Governments to turn to private capital to fulfil their investment funding gap. What is new is the urgency. And this urgency transcends multiple verticals:

From a real return perspective, institutional investors are waking up to the reality that inflation is here, and it is not looking transitory.

From an absolute return perspective, reduced growth forecasts are being priced into equity markets, resulting in re-valuation of major index constituents.

From a rates perspective, the first 5 months of 2022 have inflicted pain across the entire fixed income asset class.

But from a macro and micro perspective, the need to invest more in infrastructure has arguably never been greater since the Victorian era.

Professional Investors are once again re-opening their portfolios to larger infrastructure allocations to support the rapid transition to more digitisation, urbanisation, logistical fluidity, and of course decarbonisation.

As post-COVID and geo-political tensions unravel, a huge number of infrastructure investment opportunities are being presented.

Infrastructure investment has historically fallen behind the needs of modern society. Roll forward to 2022 and it seems as though all the stars are aligned in it's favour.

To state that infrastructure is on the minds of professional investors, currently understates the momentum behind the asset class. Five (potential) crises have come together to push investment opportunities into the palms of potential new capital:

1. The Health Crisis - not just in terms of COVID, but the future demographic hospitals will face.

2. The Climate Crisis - which ironically now has a new catalyst stemming from the Russia-Ukraine crisis and the desire for (clean) energy independence.

3. The Supply Chain Crisis - driving de-globalisation and the re-homing of production and the need for a modern digital infrastructure.

4. The Pending Economic Crisis - whilst not here today, the fear of recession or stagflation is real. Fiscal stimulus directed at long overdue public infrastructure is perhaps old-school Keynesian, but a solution that may be fitting given today's macroeconomic backdrop.

5. The Investors Crisis - Whilst diversification and compounding are the free-lunches that benefit portfolios, inflation is the tax at the foot of the bill, that eats into real purchasing power. Finding ways to protect portfolios is a dilemma that could be solved by the predictable, potentially index linked income that infrastructure investments can generate.

The question is which opportunities and asset managers are worth considering?