According to the Global Infrastructure Investor Associationthe world needs invest about 3.3 billion dollars a year In infrastructure. A figure that makes it clear that there are many opportunities in an industry that, according to the aggregate market data, has maintained an average annual profitability, above 6.5% that offered the infrastructures quoted in these last 10 years. Discarking, data and Silver Economy are, in general, the sectors with the greatest growth potential and Europe, the area with the most attractive.
Perspectives for private assets are, in general, positive. Signatures understand that these types of investments can be an alternative to quoted markets that will live episodes of volatility, with more than attractive profitability that will allow to compensate for the effect of inflation. But there is a segment that has the favor of experts: investment in non -quoted infrastructure.
As Ruperto Unzué recalls, a capital summary, the private capital funds in infrastructure have grown exponentially during the last years, so that the added value of the global transactions is between the 350,000 and 500,000 million of dollars per year.
Another successful barometer is the attractive profitability of this asset. Unzué himself points to how the aggregate data shows that investments in private infrastructure markets have maintained a average return of 10% annual.
A trend that responds to governments have budgetary restrictions and other social needs to meet, so they require the help of private investors to close the financing gap, boost the development of strategic projects and guarantee the modernization and expansion of key infrastructure.
In short, according to Ramiro Iglesias, CEO and founder of Crescenta“The participation of private investors allows not only to complement public capital, but also to provide efficiency, innovation and specialized management, thus ensuring sustainable growth and a better quality of life for society.”
A good moment and attractive arguments
In general, experts believe it is a good time to invest in infrastructure. Mainly, because the context of interest rates favors the asset. But the Altamarcam infrastructure equipment Details additional reasons. First, for the great investment opportunities related to covering the needs in sectors such as digital infrastructure and energy transition and transport. These requirements “are being catalysts of world economic growth,” for example, in renewable energies or data centers. In this sense, “private funds have the necessary capital and are being the main investors to enable these investments,” they say in the manager.
Also in Altamarcam they indicate as a point in favor of investment in private infrastructure markets, capital failure to meet current needs, “which allows investments in good entry condition.”
An attractive return profile in relation to the risk is joined to these factors, since there is the possibility of obtaining long -term stable profitability with Independence of the economic cycle“As has been demonstrated in recent years of great macroeconomic instability and where infrastructure assets have behaved favorably thanks to the protection they present against inflation and the rise in interest rates and the high visibility of long-term cash-flow.”
In this sense, Carlota Fernández de León, head of International Institutional Investors of Bestinverhe adds that “infrastructure is always interesting, regardless of the economic moment, since they are tangible and real assets that offer a combination of stability, long -term growth, protection against inflation and diversification.”
Behind this protection against inflation, it is hidden that many contracts are indexed to the escalation of consumer price indices, “What protects investment”according to the expert. On the other hand, “its essential nature and long -term contracts provide natural protection against market falls”, to which the high entry barriers and the leverage limited as generators of “unique opportunities for investors.” In summary, “investing in infrastructure means investing in the base of the global economy.”
Private equity or private debt?
Private capital can invest in infrastructure through various types of assets. Fundamentally, private debt and private equity. But which one is better for the investor? In Sum capital They believe that both products are an excellent solution for the development of assets and infrastructure companies. “Depending on the risk/ return, one solution or another can fit better,” explains Unzué, which points out that both in equity and in debt, “there is a greater specialization in investment strategies, which allows you to have products almost for any investor.” The expert mentions the Core, Core Plus, Value Add strategies, or the Senior, Junior, Mezzanine or Bridge debt funds as instruments that allow “to cover almost the entire range of possibilities and solve almost all projects.”
In Bestinver they have a similar opinion, since Fernández de León considers that the choice between private debt or private equity in infrastructure “are not exclusive to each other and both can offer greater diversification to the portfolio.” Of course, it emphasizes that the investor must consider its investment objectives, its risk tolerance and market conditions. At this point, remember that Private Equity allows to participate in the capital of companies and benefit from their growth, while private debt is based on acquiring debt from infrastructure companies in exchange for regular interest payments.
The benefits of real assets in the portfolio
Investment in infrastructure in private markets must have a place in portfolios but, to what extent? Iglesias is clear when stating that “there is no optimal percentage of how much real assets should represent in a portfolio.” The expert takes into account in this statement that the composition of investment portfolios “is influenced by multiple factors, such as the investment horizon, short and medium -term liquidity needs, the objective of investment and personal preferences such as the level of risk aversion.” But he is also aware that, to the extent that there are no capital needs in the short term, “the Incorporation of real assets in an investment portfolio ”.
In Altamarcam they are more concise. They take as reference the weight that real assets have within the portfolios of the most successful investors such as the endowments of American universities such as Harvardwhere the weight reaches between 25% and 30% of the total inverted. “From that figure, depending on the profitability/risk of investors, we find large insurance groups that dedicate more than 10% of their reserves, due to the box generation profile that has this asset.”
Decarbonization, Digitization, Transport and Silver Economy
Infrastructure is a very wide area that has investment subsegments that have clear opportunities. If something has in common, experts are their preferences for the decarbonization and digitalization.
Thus, the sectors where they see greater investment dynamism in Altamarcam are decarbonization – through electricity generation with renewable sources, energy storage through batteries, electrical transmission networks or load networks for vehicles of all kinds – and the digitalization of the economy. In this area, the firm explains that the appeal lies in the exponential growth of processing and storage of data that translates into high investments in infrastructure such as Fiber optic networks, data centers or telecommunications towers.
In the firm they add a third area, the Transport sectorthrough ports, airports, roads and railroads, “which continue to require large investments to enable the reindustrialization of developed countries or the maintenance of trade and world passenger traffic.” In Bestinver they observe growth potential in investments in water infrastructure, for example, in water treatment or in desalination plants.
From Crescenta, Iglesias refers to the existing opportunities in the so -called Silver Economy, related to population aging. A megatence that raises many challenges, “but also different attractive opportunities” through new infrastructure adapted to the way of life of this age segment.
The expert cites the real estate sector as an example, where Coliving centers stand out. “At the representative level, in 2020-2021 the manager of Carlyle private capital, together with Greystar, He developed a project designed for adults who want to boost their social life and live in a community where they can enjoy public spaces, ”says Iglesias
Even, Tavis Cannell, global Infrastructure manager in Goldman Alternative Saxesadds circular economy and social infrastructure businesses, “which cover traditional services such as recycling and more sustainable approaches for waste management, as well as new categories, for example, health care companies and education adapted to demographic evolution.”
Europe, North America and China: favorite areas
Not all geographical areas have the same number of private investment opportunities in infrastructure. Unzué, from sum capital, admits that its main exhibition is in Europe, an area that “needs large investments in new infrastructure and in the transformation of the existing one to achieve the objectives set on its agenda.” The expert cites plans such as European Green Deal y el Repower Europe.
But Unzué also believes that there are great opportunities in other markets, where infrastructure is still to be developed. “To give a fact, in China the year 2024 more photo-voltaic capacity was installed than throughout the rest of the countries together or that throughout the history of the United States,” he says and clarifies that these figures “give an idea of the great potential that exists both in more consolidated economies, with a greater prominence in technology and transformation, as in emerging economies, with a greater presence of new infrastructure.”
Altamarcam cites Europe and North America as areas with investment needs but also with “predictable and stable regulatory frameworks, tradition of public-private collaboration, risk of controlled counterpart and competitive financing conditions”.
Not surprisingly, according to Iglesias, these are “more stable economies and lead a more conservative risk profile.” The Crescenta expert is also interesting to give some exhibition, “limited”, to the Asia-Pacific (APAC) area, due to the “high growth potential and the multiple attractive opportunities to invest in real assets.”
