We are pleased to share the findings of an infrastructure investment study, released today by the Global Infrastructure Hub (GI Hub) and EDHEC Infrastructure Institute-Singapore (EDHECinfra).
The global study, which looked to identify investor expectations for the sector, found that investors have an increasing appetite for infrastructure including in emerging markets, with the number of investors looking for exposure to emerging markets set to more than double over the next 3-5 years. The study finds that investors are increasingly comfortable with long investment periods and less concerned about the lack of liquidity associated with infrastructure projects, with 81 per cent of respondents now expecting to keep investments for at least 10 years. However, the study pinpoints rising concerns about a shortage of bankable infrastructure opportunities.
Respondents identified diversification (40 per cent), higher returns (20 per cent) and inflation hedging (12 per cent) as key drivers of increased consideration for infrastructure allocation.
Despite this, the study found that the increased appetite for infrastructure is fuelling concerns that available capital will exceed the number of available opportunities. In fact, 92 per cent of investors surveyed expressed concerns about the build-up in ‘dry powder’ due to the lack of attractive investment opportunities.
Key survey findings include the following:
- Close to 65 per cent of investors have intentions to increase their allocations to infrastructure over the next three to five years and more than half of participating asset owners declare investing or wanting to invest in emerging markets;
- 82 per cent of asset owners say that the classic close-ended PE infrastructure fund is outdated;
- Close to 80 per cent of respondents believe that private infrastructure is an asset class but only half thinks that listed infrastructure has distinctive characteristics; and
- 94 per cent of respondents declare that no usable benchmark currently exists for investors in infrastructure.