Investors’ infra allocation desire increases by 38%

More than 90 percent of investors will increase their commitment to infrastructure in the next three to five years, a survey by Global Infrastructure Hub and EDHECInfrastructure Institute has found.

The figure is a significant rise on the 65 percent of investors who gave the same response to the first instalment of the Annual Global Infrastructure Investor survey last year.

The study gathered responses from 186 individuals, with over half representing asset managers, insurers, pension plans and sovereign wealth funds. A majority were based in EMEA, followed by those in the Americas and Asia-Pacific respectively.

Those expecting to keep their infrastructure commitment levels unchanged fell to 10 percent, a shift on the 24 percent reported last year. There were no responses that aimed to reduce or scrap their infrastructure exposure, compared with the 3 percent in 2016.

“This survey confirms there is a growing appetite among the most prominent global investors for investment in infrastructure,” said Chris Heathcote, chief executive of GI Hub. “Private finance will play an important role in funding that much-needed infrastructure.”

Survey respondents were also asked about their views on the potential impact of a variety of government infrastructure plans. It was notable that around 50 percent were ambivalent about plans in the US, Canada, Australia, EU and the UK. The UK received the highest number of respondents who did not believe the national infrastructure plan will change the attractiveness of infrastructure in this country. Policies put forward in the UK and EU, as well as by President Donald Trump in US, even attracted a small minority that thought they created more risk but not more rewards.

“This is a message to governments across the globe – prepare a robust pipeline of viable projects to attract that private finance,” Heathcote added. “And there is another message here for governments – national infrastructure plans are well regarded by investors that know about them. However, many are unaware of this important planning. There is an opportunity for governments to explain to investors their vision and get them on board.”

GI Hub and EDHECInfrastructure’s analysis also revealed a bucking of received wisdom surrounding greenfield and brownfield investments. The survey did not find investors required a premium for greenfield projects, in contrast to their responses to similar questions regarding investments in emerging markets and merchant infrastructure. The report attributed this to protection given to equity investors during construction and post-construction phases.