About Infrastructure
Brookfield Infrastructure Partners operates long life, high quality infrastructure assets with high barriers to entry and low maintenance capital requirements that generate stable and growing cash flows. Our current operations consist of the ownership and operation of electricity transmission systems and timberlands, and we intend to seek acquisition opportunities in other sectors with similar attributes.
We define infrastructure assets as long-life, physical assets that are the backbone for the provision of essential products or services for the global economy. Due to their nature, infrastructure assets are critical to support sustainable economic development.
Infrastructure assets are typically characterized by some or all of the following attributes:
- strong competitive positions with high barriers to entry;
- strong margins and stable cash flow; and,
- upside from economic
growth and/or inflation.
These attributes tend to be highly
attractive to institutional investors. Examples of infrastructure that have these characteristics include:
- Utilities. Utilities include the networks that provide basic utility services to communities such as gas, water and electricity.
- Renewable resources. Renewable resources are assets such as timberland, hydro-electric power generation facilities and wind power generation facilities, which produce products that are essential inputs to the global economy.
- Transportation. Transportation infrastructure supports the transport of passengers or cargo via air, land or sea and includes infrastructure such as toll roads, bridges, tunnels, airports, ports, railway lines, urban rail, ferries and other transport-related facilities.
Historically, infrastructure has been developed, owned and operated by governments and municipalities and to a lesser degree by industrial owners as part of their broader operations. However, due to a combination of supply and demand factors, these assets are increasingly being transferred to private sector owners.
On the supply side, there has been substantial under-investment in infrastructure in developed countries over past decades. Substantial upgrades and expansions of infrastructure will be required to make up the shortfall and support projected economic growth. The World Bank estimates that spending on new infrastructure for energy (including electricity), telecommunications, transportation and water will be at least $370 billion annually through 2010.
Infrastructure is evolving as an institutional asset class because of its relatively low volatility and solid returns. By investing in infrastructure, investors can benefit from the royalty income streams on essential assets, which rely on economic growth.
