The infrastructure industry needs to stop defining itself by “fuzzy core and core-plus definitions”. That was the message from EDHEC Infrastructure director Frto attendees at Infrastructure Investor’s Global Summit in Berlin.
Blanc-Brude said a more helpful definition would be defining assets according to whether they were contracted, regulated or merchant businesses. He also said he was seeing too many deals “which are really not infrastructure”.
Tom Masthay, director of real assets at Texas Municipal Retirement System, said this could be more of a geographical phenomenon. “European managers feel much more core than US-based fund managers,” he said. “There is a higher risk-return profile in the US.”
The pair were on a panel discussing whether infrastructure had peaked or whether there was still room for growth.
“I agree with the sentiment that it feels like we’ve been at peak for a number of years,” said Robert Hardy, managing director at JPMorgan Asset Management. “There’s certainly a sustained number of increasing transaction values across Europe, Australia and other markets. There’s a lot of money chasing very few assets.”
Masthay added that the “wall of capital” in the infrastructure market compared favourably with the real estate market, which he said was more prone to fluctuations. He was confident that this state of affairs could continue.
“Are we getting out of it what we want”? he asked. “It’s too early to tell. The only quantifiable way of [measuring] success is the amount of capital raised. We’re working on getting better at telling.”
The sector was given a boost via an audience poll, in which 66 percent of respondents said the market had not “reached peak infra”.