1 June 2018

High stakes: How investors can manage risk in the new infrastructure environment

Written by Fredrik Dahlqvist, Alastair Green, Paul Morgan, and Robert Palter (McKinsey)
1 June 2018

The paper looks at the consequences of Technological disruption in construction for infrastructure-investment managers. With technology transforming how we live and work, infrastructure investing is becoming more complicated. Self-driving cars, now undergoing on-road testing, could reduce the need for passenger railways or metros.

As 3-D printing gains traction and manufacturing becomes distributed, ports may require fewer storage terminals. And electronic monitoring systems, which are already available on many roads, could render toll booths obsolete. For general partners raising investment funds or direct infrastructure investors, such as pension plans and sovereign wealth funds, such changes could affect returns on the power, water, transportation, and telecom assets that were expected to provide predictable cash flows for many years.

To help investors deal with disruption, McKinsey has explored recent developments in the infrastructure-investment landscape, with a focus on technological advances that are changing both asset value and how assets are delivered.  Since there is still much uncertainty about how certain trends will play out, McKinsey has also proposed a structured approach for evaluating the risks and opportunities in specific asset classes as technology influences the market.

Publication Date: 06.2018