He said: “There are three main takeaways. The first is the reinforced appeal of infrastructure as an asset class. There is obvious evidence of the significant impact of the current economic crisis across multiple sectors. Some infrastructure assets, however, have only experienced a limited impact (eg. some regulated utilities or availability-based infrastructure) or temporary impact (eg. essential water crossings with no alternatives), vindicating careful investment selection by fund managers. This will hopefully have a positive impact on the fund management industry by providing evidence for the resilience of disciplined investment strategies throughout economic cycles.
“Secondly, we can expect a change in focus from transportation to digital within infrastructure investment strategies and allocations. Transportation will represent a higher risk for investors in the short to medium term. The intrinsically higher correlation to GDP of most transportation assets will translate into some uncertainty over the amount of travelling which new methods of work and collaboration will only amplify. Conversely, there will need to be more digital infrastructure to facilitate new ways of working.
“Finally, recent events have strengthened the case for private delivery of new infrastructure. The public budgets are even deeper in deficit after expenditure spent propping up the economy during the initial phase of the lockdown and further rounds of restrictions are likely to do further damage. Maximising the use of the increasing liquidity available to the infrastructure sector, in the current ultra-low or zero interest rate environment, should make private investment in infrastructure a highly compelling proposition.”