The Global Summit is back! Actually, it never really went away, apart from a brief online-only spell in 2020. But this year, with travel restrictions and mask mandates mostly in the rear-view mirror, there is a buzz around the Summit and a hunger to connect that is feeling very 2019.
Of course, that is where the similarities end. While, on the surface, we will be debating many of the same topics we focused on four years ago – hello ESG, energy transition, digital infrastructure, valuations – we will be doing it in a world changed beyond recognition.
It’s not all bad news. Infrastructure, as an asset class, continues to be in demand and comparatively insulated from the investor pullback being experienced in other private asset classes. According to our LP Perspectives 2023 Study, 42 percent of investors plan to invest more in the asset class in 2023 – compared with just 28 percent in private equity, for example.
In fact, while unlisted real estate and private equity fundraising dropped by 24 and 12 percent, respectively, in 2022, infrastructure fundraising increased 4 percent last year to a post-pandemic high of $162 billion.
As 2023 unfolds, there are no signs of a significant slowdown – at least, not judging by the number of mega-funds in market. There is KKR’s fifth flagship, launching in Q3 and seeking $20 billion; EQT, which recently set a €21 billion hard-cap for its latest vehicle; Stonepeak, which is expected to imminently launch its latest $20 billion flagship; and, of course, Brookfield Asset Management and Global Infrastructure Partners, currently in market with their $25 billion mega-funds.
That is the sign of a confident asset class. Either that, or infrastructure managers didn’t get the slowdown memo. And with more than 500 investors among our 2,000-plus attendees at this year’s Global Summit, you have to wonder if they will get it anytime soon.
There is also good news on the energy front. Last year, we wrote that energy security dominated the agenda, as one would expect, given the start of Russia’s war on Ukraine. Energy security worries have certainly not disappeared, but we expect the Transition to be back in the driver’s seat this year, thanks in no small part to President Joe Biden’s Inflation Reduction Act.
Other conversations might prove trickier, though. The discussion around core infrastructure – given the flurry of core funds now in market – deserves to move beyond semantics at a time when some voices are calling for fixed income to take the lead in the traditional 60/40 portfolio.
Valuations, despite the known lag in private markets, also deserve a serious debate – with talk of infrastructure “defying gravity” just making us look around the room to see if there are any parachutes left.
Ditto the conversation around hot-money sectors like fibre, where there are early indications that some rollouts will be scuppered by inflation and the end of cheap debt. DigitalBridge chief executive Marc Ganzi, who will be doing a fireside chat at the Summit on Wednesday, had choice words in this month’s cover story for the deluge of generalist infrastructure money that descended on the sector. Long story short: don’t be surprised if there is more trouble in fibre land.
And that is all the forecasting we’re comfortable doing, particularly in a week when the collapse of Silicon Valley Bank has offered a stark reminder that systemic risk is just around the corner these days.
At our 2019 Summit, we employed a futurist – former Wired editor-at-large Ben Hammersley – to help us make sense of what came next. His best piece of advice? Telling a room full of long-term investors that any predictions beyond the next five years that were not related to climate change were… a word we still can’t print.
Ben, you didn’t know the half of it.
See you in Berlin.