WATCH: Operating assets in EMs are already at a different risk stage

Glen Matsumoto, head of infrastructure at Actis, predicts investors that are already not targeting these assets will be doing so in the next three-to-five years.

Video transcript

“In emerging markets, there is so much growth. There are so many new greenfield investment that need to be done. That was where so much of the focus has been for many, many years, last 20 years. You’re going to build new power plants, you’re going to build new water facilities, telecoms facilities, etc. So new greenfield has been the focus.”

“And when you think about construction, in many of these countries, that’s where the highest risk is, I believe. Getting the permits, getting the land, getting the approvals from governments. Now that there has been a lot of private sector capital gone into several infrastructure assets in certain emerging market countries – think about Chile, Mexico, Brazil, India and elsewhere. Because the money has gone in and those assets have been built, they are operating. That is a different risk stage and I believe more and more investors will recognise that over time as these conventional wisdoms break down. I am convinced of that.”

“So if an institutional investor is not investing in these markets in the operating phases for certain strategies, they will be in these markets in another three years, five years, and certainly 10 years. The dynamic is too much. And more and more of these assets will be operating, at the safer part of their life cycles, operating assets.”