En Voyage_Issue#11_Flickbook

Business
THE ROAD TO
INFRASTRUCTURE
INVESTMENT
BY ANDREW MAIDEN, DIRECTOR OF FUND SERVICES, INTERTRUST
Against a backdrop of shrinking
returns from traditional investment
fund strategies, alternative
asset classes are more popular
than ever. Most notable among
these is infrastructure investing,
which is seeing a boom. Andrew
Maiden, Director of Fund
services at Intertrust, looks
at the rise of the sector and
explains why it’s so popular.
As an asset class, infrastructure
investment is fast becoming a
“must have” component of many
portfolios, with tremendous growth
being seen throughout the sector.
The European Commission
estimates that, in order to meet
the UN’s Sustainable Development
Goals, around $12tn of infrastructure
investment is needed between
now and 2030. With infrastructure
being the essential facilities and
services upon which the economic
productivity of society depends,
there is a huge responsibility on
governments to raise and spend
the necessary funds to maintain
and install new infrastructure.
Austere governments are reliant
on the private sector to contribute
funds for infrastructure projects and
this need for capital has resulted in
an industry that is as big as it has
ever been and continues to grow.
GROWTH OPPORTUNITY
The advantage of the infrastructure
investment class is that it is still
relatively untapped so escapes
the saturation that has befallen
the likes of the prime commercial
and residential real estate markets
in recent years. Infrastructure can
also offer consistent growth cash
flows and returns that are not
correlated with other asset classes.
Infrastructure investing has been
a common element of institutional
investors’ portfolios for a while now
but its increasing popularity comes
from the likes of pension funds
and sovereign wealth funds which
are viewing direct infrastructure
investment as a viable option
for expanding their portfolios.
Opportunities in the developed
nations and OECD countries
continue to be seen but with
valuations becoming higher and deal
win rates reducing, the emergence
of developing markets such as
Africa are now also starting to offer
new investment opportunities
and potential returns, albeit with
correlating risks associated with
investing in this part of the world.
A geographic spread can bring
further diversity to investors’
portfolios; another incentive to
invest wisely in infrastructure.
A VARIED CLASS
Infrastructure requirements are vast
and so the options for investment
are incredibly varied; a further pull
factor for the class. Different risk
and return characteristics apply
to the class, depending on the
lifecycle of the type of asset.
The infrastructure theme
encompasses everything from
Greenfield assets – new projects
which are approaching or under
construction – to mature assets
which are fully operational assets
that are already generating
revenues. The former has
potentially higher returns but also
represents a higher level of risk.
Increasingly common is investment
in technological infrastructure; a
sector which is growing thanks
to the continued digitisation of
developed societies especially. This
includes data centres, mobile phone
antennae and fibre optic technology.
CHOOSE WISELY
Dedicated infrastructure funds are
a popular avenue for accessing this
sector as they provide investors with
expert advice and access to projects
which they may not necessarily
be able to access on their own.
The jurisdiction in which to set
up structures for infrastructure
investment is another important
choice. Guernsey is well placed
to carry out this work as it is
already home to some of the
world’s best-known infrastructure
managers as well as having a
strong track record on regulation,
asset protection and expertise.
The road to profitable investing can
be rocky but infrastructure certainly
presents a clear opportunity so
long as you have a good roadmap
in the form of a sound strategy
and an experienced, expert
manager to act as the driver.
If you would like further information
on the services provided by
Intertrust, please contact
Andrew Maiden
Andrew.maiden@intertrustgroup.com
Intertrust Guernsey
Email: guernsey@intertrustgroup.com Intertrust Fund Services (Guernsey) Limited (Registration Number: 34447) is licensed in Guernsey by the Guernsey
Financial Services Commission under The Protection of Investors (Bailiwick of Guernsey) Law 1987, as amended. Telephone calls may be recorded for
monitoring and training purposes. This document is provided by Intertrust for information purposes only and does not constitute an offer, invitation or
inducement to contract. The information herein does not constitute legal, tax, regulatory, accounting or other professional advice and therefore one should
seek appropriate professional advice before considering a transaction as described in this document. No liability is accepted whatsoever for any direct or
consequential loss arising from the use of this document. The text of this disclaimer is not exhaustive, further details can be found at:
http://www.intertrustgroup.com/disclaimer.html
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