Fiscal policy, vaccines and green initiatives are creating waves of change in infrastructure. What exactly is infrastructure now, and most importantly what is not infrastructure? This session examined how the digitalization of economies and the shift to renewable energy offer potential long-term growth opportunities in infrastructure; and how it can play a role in long-term investor portfolios.[vc_quotes layout=”accordion” quotes=”%5B%7B%22name%22%3A%22Ben%20Hawkins%22%2C%22job_role%22%3A%22Senior%20vice%20president%2C%20infrastructure%2C%20Alberta%20Investment%20Management%20Corporation%22%2C%22content%22%3A%22Ben%20Hawkins%20leads%20the%20team%20of%20investment%20professionals%20responsible%20for%20a%20global%20portfolio%20of%20infrastructure%20and%20renewable%20resources%20investments.%20Hawkins%20also%20currently%20serves%20on%20the%20board%20of%20directors%20for%20Grupo%20SAESA%2C%20having%20previously%20served%20on%20the%20boards%20of%20London%20City%20Airport%2C%20Puget%20Sound%20Energy%2C%20Mosaic%20Forest%20Corp%20and%20Autopista%20Central.%20He%20joined%20AIMCo%20in%202007%20as%20a%20portfolio%20manager%20with%20a%20focus%20on%20strengthening%20the%20direct%20investment%20capabilities%20for%20the%20asset%20class.%5CnSince%20becoming%20part%20of%20the%20infrastructure%20team%2C%20he%20has%20held%20progressively%20more%20senior%20positions%20resulting%20in%20him%20becoming%20head%20of%20the%20group%20in%202014.%20Hawkins%E2%80%99%20previous%20experience%20includes%20the%20utility%20sector%20where%20he%20worked%20in%20several%20commercial%20roles%20developing%20and%20acquiring%20infrastructure%20assets%20across%20the%20US%20and%20Canada.%20Prior%20to%20that%2C%20he%20worked%20for%20an%20advisory%20firm%20providing%20private%20capital%20solutions%20as%20well%20as%20developing%20and%20refining%20business%20strategy.%5CnHe%20holds%20both%20an%20MBA%20and%20Undergraduate%20degree%20from%20the%20University%20of%20Alberta%20and%20is%20a%20CFA%20Charterholder.%22%2C%22image%22%3A%2244333%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Fben-hawkins-14599127%2F%3ForiginalSubdomain%3Dca%22%7D%2C%7B%22name%22%3A%22Ben%20Morton%20%22%2C%22job_role%22%3A%22Head%20of%20global%20infrastructure%2C%20Cohen%20%26%20Steers%20(United%20States)%22%2C%22content%22%3A%22Benjamin%20Morton%2C%20executive%20vice%20president%2C%20is%20head%20of%20global%20infrastructure%20and%20a%20senior%20portfolio%20manager%20for%20Cohen%20%26%20Steers%E2%80%99%20infrastructure%20portfolios%2C%20including%20those%20focused%20on%20master%20limited%20partnerships.%20He%20has%2022%20years%20of%20infrastructure-related%20investment%20experience.%20Prior%20to%20joining%20Cohen%20%26%20Steers%20in%202003%2C%20Morton%20worked%20at%20Salomon%20Smith%20Barney%20as%20a%20research%20associate%20for%20three%20years%2C%20covering%20the%20utility%20and%20pipelines%20sectors.%20He%20also%20worked%20at%20New%20York%20Mercantile%20Exchange%20as%20a%20research%20analyst.%20Morton%20holds%20a%20BA%20from%20the%20University%20of%20Rochester%20and%20an%20MES%20from%20Yale%20University.%20He%20is%20based%20in%20New%20York.%22%2C%22image%22%3A%2244336%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Fben-morton-a83b092a%2F%22%7D%2C%7B%22name%22%3A%22Dominic%20Swan%22%2C%22job_role%22%3A%22Global%20CIO%20private%20debt%2C%20HSBC%20Asset%20Management%20(United%20Kingdom)%22%2C%22content%22%3A%22Dominic%20Swan%20is%20senior%20adviser%20to%20the%20global%20chief%20investment%20officer%20of%20HSBC%20Asset%20Management%2C%20and%20also%20head%20of%20ABS%20Investments.%20As%20senior%20adviser%20he%20covers%20all%20assets%20classes%20and%20countries%2C%20including%20debt%2C%20equity%20and%20alternative%20investments.%5CnAs%20head%20of%20the%20ABS%20Team%2C%20he%20manages%20over%20%2440%20billion%20of%20ABS%20across%20a%20range%20of%20sectors%20and%20countries.%5CnBefore%20taking%20up%20his%20current%20role%2C%20Swan%20was%20global%20head%20of%20fixed%20income%20for%20Halbis%20Capital%20Management%2C%20where%20he%20was%20responsible%20for%20teams%20managing%20over%20%24200%20billion%20of%20assets%2C%20including%20Euro%2C%20Sterling%20and%20USD%20fixed%20income%20portfolios%2C%20ABS%20and%20EMD.%5CnSwan%20has%20over%2020%20years%E2%80%99%20experience%20of%20the%20ABS%20market.%20In%20previous%20roles%20at%20HSBC%20he%20established%20and%20managed%20the%20banks%20UK%20credit%20card%2C%20covered%20bond%20and%20RMBS%20issuance%20programs.%20He%20previously%20worked%20for%20almost%2010%20years%20at%20Moodys%20Investors%20Service%20where%20he%20was%20rating%20committee%20chairman%20for%20structured%20covered%20bonds%20and%20much%20of%20the%20European%20securitisation%20market.%22%2C%22image%22%3A%2244339%22%2C%22linkedin%22%3A%22%22%7D%5D” title=”Speakers” el_class=””][vc_quotes layout=”accordion” quotes=”%5B%7B%22name%22%3A%22Colin%20Tate%20%22%2C%22job_role%22%3A%22Chief%20executive%2C%20Conexus%20Financial%20(Australia)%22%2C%22content%22%3A%22Tate%20has%20been%20an%20investment%20industry%20media%20publisher%20and%20conference%20producer%20since%201996.%20In%20his%20media%20career%2C%20Tate%20has%20launched%20and%20overseen%20dozens%20of%20print%20and%20electronic%20publications.%20He%20is%20the%20chief%20executive%20and%20major%20shareholder%20of%20Conexus%20Financial%2C%20which%20was%20formed%20in%202005%2C%20and%20is%20headquartered%20in%20Sydney%2C%20Australia.%20The%20company%20stages%20more%20than%2020%20conferences%20and%20events%20each%20year%20%E2%80%93%20in%20London%2C%20New%20York%2C%20San%20Francisco%2C%20Los%20Angeles%2C%20Amsterdam%2C%20Beijing%2C%20Sydney%20and%20Melbourne%20%E2%80%93%20and%20publishes%20five%20media%20brands%2C%20including%20the%20global%20website%20and%20strategy%20newsletter%20for%20global%20institutional%20investors%20conexust1f.flywheelstaging.com.%20One%20of%20the%20company%E2%80%99s%20signature%20events%20is%20the%20bi-annual%20Fiduciary%20Investors%20Symposium.%20Conexus%20Financial%E2%80%99s%20events%20aim%20to%20place%20the%20responsibilities%20of%20investors%20in%20wider%20societal%2C%20and%20political%20contexts%2C%20as%20well%20as%20promote%20the%20long-term%20stability%20of%20markets%20and%20sustainable%20retirement%20incomes.%20Tate%20served%20for%20seven%20years%20on%20the%20board%20of%20Australia%E2%80%99s%20most%20high%20profile%20homeless%20charity%2C%20The%20Wayside%20Chapel%3B%20and%20he%20has%20underwritten%20the%20welfare%20of%2060%2C000%20people%20in%2028%20villages%20throughout%20Uganda%20via%20The%20Hunger%20Project.%22%2C%22image%22%3A%2244341%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Fcolin-tate-839a5a181%2F%3ForiginalSubdomain%3Dau%22%7D%5D” title=”Moderator” el_class=””][vc_empty_space height=”10px”]
Key takeaways
In a panel session on opportunities in infrastructure investors noted how technological change is repricing assets and many investors are substituting fixed income with infrastructure debt.
US President Biden’s plans for sweeping infrastructure investment could have important investor consequences around tax cuts and renewables. Driving 5G development will enable greater penetration for tower companies and economically sensitive businesses like freight railway will benefit from growth.
Higher yields can be found in non-investment grade infrastructure allocations, but investors shouldn’t view this as a long-term strategy.
Renewables are often linked to quasi-guaranteed cashflows comprising long-term contracts with lower volatility. In contrast, digital assets will be subject to huge change as the “revolution” continues. Hence the need to adopt a shorter time frame investing in assets over a 3 to 5-year horizon.
In periods of high inflation, infrastructure credit risk falls. This is priced into how debt products are valued in the market, providing a “windfall opportunity.”
Investor areas of focus include renewables, telecoms and digital infrastructure given new trends in remote working.
Data is increasingly helping resolve intermittency challenges in renewables.
Stranded or obsolete assets could spike in traditional energy infrastructure as well as in assets subject to technological change. For example, technological disruption is growing in the satellite space.
Aware Super is considering a return to infrastructure funds after years of favouring direct investments. The infrastructure allocation currently stands at $15 billion and the fund sees benefits to access a “broader set of offerings” and opportunity sets via fund commitments to GPs, its head of infrastructure Mark Hector says.
The chair of the International Forum of Sovereign Wealth Funds, Adrian Orr, says entities such as the IMF could pave the way for large-scale investment in emerging-market infrastructure projects.
Listed infrastructure is an ill-defined asset class that is often sold with false promises, threatening to discourage institutional players from genuine long-term investment in capital projects.
The first-ever benchmarks for private infrastructure equity and debt investments have been provided by EDHEC Infrastructure, which is releasing hundreds of new indices to end confusing packaging.
Alaska Permanent Fund will focus on smart beta strategies as it seeks to further increase in-house management. It will also develop income-generating strategies away from traditional fixed income, leveraging its size and infinite investment horizon in competing for US infrastructure and real estate assets.
There is still value in infrastructure, according to ADIA’s head of infrastructure, John McCarthy, provided you adopt a flexible approach. The huge sovereign wealth fund is reviewing its strategy, including whether it currently has appropriate benchmarks in infrastructure, a question that has been prompted by its outperformance. The natural competitive advantage that the Abu
Despite upturns in equity and bond prices sending 2012 returns into double digits at many large Danish funds, it appears that successfully implementing infrastructure initiatives remains the holy grail of Danish institutional investing. Instead of merely basking in 12.9-per-cent annual returns, Industriens Pension, for instance, used its 2012 results announcement to make a commitment to
Leave a Comment
You must be logged in to post a comment.
Login