AXA sees $53 trillion opportunity in infrastructure

Dominique Senequier, CEO of AXA Private Equity, listed ageing infrastructure, regulation and new services among the drivers of infrastructure investment needs in OECD countries. Asian economies also face steep financing needs but offer more attractive returns.

Dominique
Senequier

The booming global infrastructure market will require $53 trillion (€38 trillion) of investment worldwide in the next 25 years to support world population growth, according to AXA Private Equity chief executive officer Dominique Senequier.

Senequier said the increasing financing requirements in Organisation for Economic Cooperation and Development-member states like the UK and Australia are the result of ageing infrastructures that were built 40 years to 50 years ago. She said other factors like regulatory constraints and new service needs like telecommunications also increase the need for infrastructure financing. Large industrial conglomerates within those countries cannot finance infrastructure projects by themselves, she said.

Developing countries also need to develop their infrastructure to support economic growth, she said. India will need $250 billion in infrastructure investment by 2010, China will need $132 billion while East Asia and the Pacific will need $178 billion, according to figures from the World Bank.

AXA Private Equity recently decided to launch an infrastructure initiative in India and elsewhere in Asia alongside local partners. The firm predicts that returns in Asian infrastructure projects can reach 15 percent to 20 percent, driven primarily by capital appreciation rather than dividends.

Senequier, who made the comments at a recent press lunch in Paris, also said that growing appetite for the asset class from institutional investors is helping to fuel strong growth in fundraising. Infrastructure fundraising remains solid, with more than $90 billion raised as of June 2008 by 71 funds worldwide.

Created in 1996, AXA Private Equity is the captive private equity arm of French insurer AXA Group. The firm manages and advises a total of $25 billion of assets. It has offices in seven countries and more than 100 investment professionals.

The firm started up its infrastructure group in 2005. The infrastructure group has $2 billion of assets under management and has invested $900 million to date in toll roads, utilities and renewable energy across France, the UK and Italy.