Investors

Market conditions

Infrastructure investments remain an attractive source of income and capital appreciation for investors.

Demand for infrastructure investment remains strong. In the current low interest rate and growth environment investors are attracted by the perceived stability of infrastructure assets and the potential for higher yields on investment than achievable through holding cash.

Competition for new investments combined with the availability of debt finance for infrastructure investment on attractive terms has driven the price of infrastructure assets materially higher over recent years and therefore projected returns lower.

In particular, we continue to see high levels of competition for large core economic infrastructure assets. The relative size of these investments and their supporting regulatory environment make investments of this nature attractive for both direct investors and fund managers.

This demand has been evident in the recent sales of Anglian Water Group and Elenia from our portfolio.
In both examples, the price incoming investors were willing to pay meant that continuing to hold these assets within our portfolio would have been dilutive to our target return and yield.

 

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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