• Home
  • About
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

Finding resilience in infrastructure investments: Focusing on the mega-trends

0
  • by Guest
  • in Blogs · LGPSi
  • — 26 Oct, 2020

Photo by Jackson David, Unsplash

Sponsored article: The stable, non-cyclical cash flows that the infrastructure asset class can provide, writes Jerome Sousselier, are particularly attractive to investors looking to generate steady, predictable returns with low volatility.

Infrastructure investments also offer the benefit of diversification within a wider portfolio.

Against a backdrop of economic fragility and volatility caused by the Covid-19 pandemic, finding investments that exhibit the necessary resilience to keep generating returns means maintaining a disciplined focus on a core set of mega-trends in the energy, digital and mobility sectors. The changes being wrought by these key new trends in certain parts of the market are such that infrastructure renewal is almost an imperative and this in turn yields some attractive opportunities.


12th Local Authority Treasurers Investment Forum & FDs’ Summit
NOW A VIRTUAL EVENT + ZOOM151 Networking
Jan 21, 22 & 23, 2021


Digital & energy

One example would be the digital infrastructure sub-sector. User habits are being driven by the rollout of digital devices which is prompting significantly increased data consumption. Higher bandwidth and download speeds are also required to support an increasing “work-from-home” requirement and it also needs to power the “internet of things” (IoT) as everyday appliances and machines become WiFi-enabled so as to function more efficiently. The great majority of existing telecoms infrastructure cannot support the increased levels of connectivity that are required, meaning an ongoing need for the rollout of optical fibre networks, data centres, sub-sea cables and radio towers.

For the energy and utilities sectors there are a number of catalysts driving the need for new investment to enable the energy transition. On the one hand there have been technological advances in energy production prompted by the push for decarbonisation, eg., solar, wind, which inevitably requires new infrastructure investments.

Alongside, there is the need to upgrade and integrate Europe’s energy grids so as to form “smart grids”, allowing for supply and demand to be met with greater intelligence, thereby reducing overall energy consumption. Another key area is security of energy supply, given an increased reliance on renewables, and this means a focus on energy storage solutions, batteries and back-up power.

SDGs

A common theme here is sustainability. A large part of the pressure to improve and upgrade infrastructure comes from the social and environmental imperatives that increasingly govern energy generation and consumption. ICG’s Infrastructure equity strategy team takes the view that a clear route to downside protection is to invest in assets which are focused on sustainability. To that end, the team has done two things: it has aligned its strategy to the UN’s Sustainable Development Goals and actively monitors the impact of the fund’s investments on four relevant UN PRI goals that we have selected and it has decided to focus mainly on investments linked to energy transition (renewables, energy efficiency, smart meters) and digital infrastructure—both sectors having also demonstrated their resilience over the last few months.

In order to optimise the risk profile of an investment, we think it is also important to focus both on smart structuring ie, investing across the capital structure (equity and quasi equity) which affords us additional downside protection and also that we source primary transactions from and in conjunction with corporates ie, corporate spin-offs and funding growth and/or capex of established corporates.

Jerome Sousselier is managing director of ICG’s Infrastructure Equity Strategy.

For institutional/professional/accredited investors only.

Photo by Jackson David on Unsplash

FREE monthly newsletters
Subscribe to Room151 Newsletters

 Monthly Online Treasury Briefing
Sign up here with a .gov.uk email address

Room151 Webinars
Visit the Room151 channel

Share

You may also like...

  • Lancashire fund looks to future deals after Eurostar setback Lancashire fund looks to future deals after Eurostar setback 5 Mar, 2015
  • Terry Crossley: Pooling is like a rugby ball, the bounce is unpredictable Terry Crossley: Pooling is like a rugby ball, the bounce is unpredictable 24 Jan, 2017
  • Lancs and LPFA merge assets and could open door to other funds Lancs and LPFA merge assets and could open door to other funds 4 Dec, 2014
  • West Berkshire ruling complicates development schemes West Berkshire ruling complicates development schemes 11 Dec, 2018

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 2 days ago

    Will new public procurement rules offer the best commercial results?: The government has issued a green paper on reforming procurement rules. Helen Randall and Rebecca Rees examine the proposals and argue they may not go far enough. The Cabinet… dlvr.it/Rqtw6T pic.twitter.com/9GiVTkL08U

    Room151 7 days ago

    The vaccine may help settle cash flows but inflation remains a risk: Sponsored article: Lauren Sewell examines the prospects for long-term borrowing as Brexit settles and vaccines are deployed against Covid-19. On the 9th October 2019 Whitehall sent… dlvr.it/RqZXCr pic.twitter.com/PzgOZOGQ0k

    Room151 7 days ago

    ESG in liquidity: Sponsored article: Gavin Haywood looks at the integration of ESG in Federated Hermes’ money market funds. Federated Hermes has over 300 public sector clients invested in our AAA rated money[...] dlvr.it/RqZX5f pic.twitter.com/E87sBXsay8

    Room151 1 week ago

    New realities of investing cash and liquidity: “What to do now?”: Sponsored article: Brian Buck looks at the “unique challenge” for cash management strategies. As investors assess the ongoing impact of the pandemic on their business, levels of cash and… dlvr.it/RqVbk9 pic.twitter.com/ZElVASmEUV

    Room151 1 week ago

    Extra finance promised by the government receives a broad welcome: Sponsored article: The financial pressures facing local authorities this year continue to pose challenges for council treasurers. While the launch of the UK’s Covid-19 vaccination… dlvr.it/RqTzTF pic.twitter.com/HCjH0pyHR5

    Room151 1 week ago

    A savvy approach to managing your cash: Sponsored article: Caroline Hedges examines the need for active cash management to achieve a higher than average return. Last year saw the already mountainous pile of negative-yielding debt around the[...] dlvr.it/RqTzMK pic.twitter.com/uP0RQYTJLt

    Room151 1 week ago

    Putting alternatives at the heart of multi-asset portfolios: Sponsored article: Nick Edwardson looks at the assets that provide the “most attractive opportunities”. We believe that asset allocation is the primary driver of investment returns and that the… dlvr.it/RqQ2Qt pic.twitter.com/WLBzvRRRUQ

    Room151 1 week ago

    Thriving in the pandemic: Avoiding the stragglers: Sponsored article: George Crowdy looks at the sectors providing opportunities for sustainable investment. Throughout much of 2020, we talked about why sustainable investing has thrived in the pandemic,… dlvr.it/RqQ2NQ pic.twitter.com/dxiPWKFsPl

    Room151 1 week ago

    The development of CCLA’s mental health benchmark: Sponsored article: Amy Browne examines the importance of investing in mental health in the workplace. We are living through a public health emergency in more ways than one. Physical health[...] dlvr.it/RqQ2Jx pic.twitter.com/o6yRSCX3oF

    Room151 1 week ago

    Brexit: What the EU trade deal means for the UK economy: Sponsored article: Hetal Mehta looks at the impact of Brexit on economic prospects. Four and a half years after voting to leave the EU, on Christmas Eve the UK finally[...] dlvr.it/RqLBDt pic.twitter.com/No62srfE8h

    Room151 1 week ago

    Cash dethroned: The quest for liquid yield: Sponsored article: Peter Hunt and George Carne ask how treasury departments can balance the need for yield and liquidity. The massive stimulus and waves of liquidity provided by central banks[...] dlvr.it/RqLBDj pic.twitter.com/05g6Zhu1kU

    Room151 1 week ago

    Richard Harbord: Delayed “capital determinations” make section 25 opinions a new crunch point: The severe pressure on local government budgets now means section 151 officers confront a tricky call on  whether they can make a judgement on the robustness… dlvr.it/RqLBDV pic.twitter.com/vTAbDKFzkI

    Room151 1 month ago

    PWLB Consultation: Analysis straight from Dickens: Helen Radall and Paul McDermott present a legal examination of the new PWLB borrowing rules as Charles Dickens might have imagined it. Free and easy PWLB (“Marley” to his friends)[...] dlvr.it/RnmwLq pic.twitter.com/yFxcPrQqEG

    Room151 1 month ago

    Room151’s top stories from a momentous year: 2020 was the year in which local government grappled with Covid-19, funding strains, controversy over borrowing rules and the threat of financial collapse. It has been an exhausting and historic[...] dlvr.it/RnlpZg pic.twitter.com/g3myNyox6J

    Room151 1 month ago

    Tracy Bingham: 2020, a year best forgotten but also one of learning: Many will rush to erase 2020 from their memories but, writes Tracy Bingham, there were also many lessons about finance teams, strategic planning and leadership. 2020: A year we’d… dlvr.it/RnlpY2 pic.twitter.com/m7G1krrtCu

    Room151 1 month ago

    Settlement must address ‘precarious’ local government finances: Dan Bates crosses his fingers for “no nasty surprises” in this week’s funding settlement but argues the “bigger prize” is post-Covid financial certainty. Thursday (17 December) should be the… dlvr.it/Rnj9dG pic.twitter.com/KLKjjuBqJE

    Room151 1 month ago

    PWLB consultation: Big change on the way but there are ‘grey areas’ and opportunities: The consultation on PWLB borrowing has concluded creating a new landscape for funding property acquisition. Our experts look at the implications. Tracie Langley The… dlvr.it/RndRvJ pic.twitter.com/KEqXEBmEfq

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story Exploring a pro-active stance to ESG data and listings
  • Next story How to clear those McClouds

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we'll assume that you are happy to receive all cookies from this website.OK