Building for growth: Unlocking the power of infrastructure assets

What trends are infrastructure investors observing?

As we look at the infrastructure market today, we see three key big macro trends that are driving investment decisions and allocations. The first is decarbonization. Obviously, companies and governments wishing to get to a net zero future. Second is digitalization. Investment in digital infrastructure the digital infrastructure that we use every day. And that's growing quite dramatically as we speak.

And then also what we call decentralization, which is really the outsourcing of infrastructure that's owned, needed or developed by corporates around the world. There are hundreds of billions of dollars being allocated into these trends today. And at the same time, with the volatility in the public markets, a lot of corporates that own this infrastructure or need it, they're outsourcing that to private market investors.

So there's a huge, huge macro set of trends pushing more demand for infrastructure investment. And that volatility is actually driving more towards the private markets to satisfy those needs.

How do you evaluate new technology and developments in energy infrastructure?

There are two really pervasive trends in today's market that are driving huge amounts of activity. One of the huge trends in today's market is in and around digital infrastructure, and the need for more and more data centers as we transitioned into a world in which artificial intelligence, or AI, is pervasive. In fact, there are predictions that we need about double the number of data centers by 2030. That is massive. Hundreds and hundreds of billions of dollars of investment capital needed to enable that. And it's not just to build the data centers themselves. It's also the amount of power that is needed. The other big trend is around energy transition and what we're really focused on is what is beyond wind and solar.

It's renewable fuels. It's long-term storage of energy. It's more recyclables in the circular economy. It's carbon capture and storage.

How does infrastructure fit in a portfolio?

There's a number of things about infrastructure that's diversifying, that's not linked to other asset classes. First of all, key to the asset class is stable income and providing dividend streams over a long period of time. But also that is coupled with capital appreciation. The interesting thing about infrastructure in an overall portfolio is it is quite diversifying. We saw this over the last two and a half years when interest rates started going up. Equity values actually went down for quite a period. And in that marketplace there was stability in the valuations of infrastructure assets over time, because most of these assets have long term contracted revenue streams that provide certainty in terms of dividends and overall returns over time.

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