Investors

Market conditions

The sustained low interest rate environment and macro-economic uncertainty have continued to drive demand for long duration assets with stable cash flows.

Over recent years, this has resulted in significantly increased competition for infrastructure assets, where cash yields and the relative insensitivity to economic cycles make the asset class attractive for investors.

Competition for new investments in infrastructure assets comes from existing specialist financial investors and fund managers, as well as from large pension funds, sovereign wealth funds and insurance companies, a number of which have direct investment capabilities.

Underlying investors continue to increase their allocations to the infrastructure sector and overall remain under-invested relative to target allocations.

This increase in demand, combined with the availability of debt finance for infrastructure investment on attractive terms, has driven the price of infrastructure assets materially higher and therefore projected returns lower.

This trend has been most evident in the market for large core economic infrastructure assets. Over the recent past, this compression in returns has had a materially positive impact on the value of the Company’s investments, many of which were purchased in a more favourable projected returns environment.

 

INVESTMENT ACTIVITY

Market conditions have shaped our investment activity to focus on:

  • Mid-market economic infrastructure businesses in the core and adjacent sub-sectors;
  • Economic infrastructure businesses with characteristics that can be managed to enhance value over the period of ownership, including for example some level of demand or market risk; and
  • Greenfield projects.
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