Andrew Greenup
Colonial First State Global Asset Management’s (CFSGAM) Global Listed Infrastructure team has marked their 10th anniversary by releasing a whitepaper, ‘Past, present, future’, reflecting on the last decade of investing in infrastructure via listed securities.
The paper, authored by Andrew Greenup, deputy head of Global Listed Infrastructure at CFSGAM, reviews:
- The performance the asset class has achieved for investors over the last 10 years;
- The steady increase in investible assets;
- Major trends that have affected global listed infrastructure;
- The main themes that will impact the sector over the next decade.
Some highlights from the report:
- Over the last decade, the global listed infrastructure securities (GLIS) asset class has generated returns of 9% p.a. with a standard deviation of 11% p.a. This compares favourably to global equities (6% p.a.), global property securities (3% p.a.) and global bonds (8% p.a.)
- Growth in investible assets has come from three main areas:
- Corporate restructurings: In the lower growth world post the GFC, companies have increasingly looked to streamline and optimise their capital structures and this has often led to the divestment of their highly valuable infrastructure assets. Key examples in the paper.
- Government privatisations: Significant rise in government debt post the GFC combined with increased spending on healthcare and social security, has led governments to dispose of high quality infrastructure assets to help maintain financial stability. Key examples in the paper.
- Equity needed to grow existing infrastructure businesses: Listed infrastructure companies have issued large amounts of new equity over the past decade in order to grow existing asset bases while maintaining balanced capital structures.
- Key trends over the last decade include: resilient and growing earnings streams despite the GFC and subsequent sluggish economic recovery; high degree of structural, rather than cyclical, growth over the past decade notably the growing viability and expansion of renewable energy, airport passenger growth (2.6x global GDP) and mobile tower and small cell infrastructure to support society’s increasing demand for mobile data.
- Key issues that will impact GLIS over the next decade include: increased fund flows into GLIS due to increased demand for low volatility, income producing assets as baby boomers begin to draw down their retirement savings and put a greater emphasis on capital preservation; rising economic nationalism and de-globalisation has the potential to increase political and legal risks; potential disruption to infrastructure business models posed by the rollout of 5G, 3D printing, growing take-up of electric cars and autonomous vehicles, among others.