In an increasingly challenging macro-economic environment, investing in Private Infrastructure is an attractive opportunity for investors.
SO WHAT IS EXACTLY PRIVATE INFRASTRUCTURE?
We all use infrastructure services in our daily lives. From when we first turn the light on in the morning to when we return from work by road or using public transport, we are using infrastructure assets. Infrastructure is the essential services that allow billions of individuals and businesses to go about their daily lives.
Infrastructure is made up of a number of key sectors which include Transport & Logistics, Energy, Environmental services as well as Social Infrastructure. The fastest growing infrastructure sector is Telecoms where the shift to online has led to fast-growing demand for high speed broadband and data services.
WHY INVEST IN PRIVATE INFRASTRUCTURE ?
STABLE & RESILIENT RETURNS
Firstly, given their essential nature, infrastructure investments generate stable and resilient cash-flows. Combined with an active approach to ownership, this has generated stable and attractive historic returns. Whilst past performance is not a reliable indicator of future performance, research by the EDHEC Infrastructure Institute has shown that unlisted infrastructure has generated annual returns of 13.5% per year over the last ten years.
Including infrastructure in a portfolio will help reduce overall volatility at the same time as offering attractive returns.
Infrastructure contracts are frequently indexed to inflation, thereby providing a long-term hedge for those who may be concerned about a rise in inflation in the future.
A SUSTAINABLE INVESTMENT
Finally, many investors are actively seeking to shift their portfolios towards more responsible and sustainable investments. By focusing on sectors such as renewable energy or social infrastructure, infrastructure funds offer investors the opportunity to make a positive contribution at the same time as generating attractive financial returns.
WHY INVEST IN PRIVATE INFRASTRUCTURE NOW?
The outlook for private sector funding of infrastructure is healthy. According to the OECD, annual infrastructure spending is set to exceed $6trn annually between 2016 and 2030. At the same time, government budgets are increasingly stretched, particularly post the onset of the coronavirus. This leaves a significant role for the private sector and in particular for infrastructure funds.
We believe that infrastructure’s stable returns and the positive outlook represent an attractive opportunity in an otherwise challenging and unpredictable environment.
HOW CAN I INVEST IN PRIVATE INFRASTRUCTURE?
The private investments team within BNP Paribas Wealth Management is focused on identifying the very best private investment opportunities for our clients.
Our track-record and the quality of our private capital partners have made BNP Paribas a leader in its market. If you are interested in learning how you can invest in opportunities in private infrastructure, click on the button below, fill the form, and a private banker in your region will call you back.