Operations
About Infrastructure
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;
- high margins and stable cash flow; and,
- upside from economic growth and/or inflation.
Examples of infrastructure assets include the following:
- Utilities. Utilities include the networks that provide basic utility services to communities such as gas, water and electricity.
- 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.
- Timber. Timber is a vital component of the global economy, and is used to produce lumber, paper and other wood products.
- Other. Other infrastructure includes social infrastructure (such as health, justice, and education), industrial infrastructure, desalination plants.
Our current portfolio of infrastructure assets are primarily in utilities, transportation, and timberlands sectors, as well as social infrastructure. These operations are located in North and South America, Europe, Australasia and China.
Evolving As An Asset Class
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.
