Published May 3, 2022 | 4 min watch
Key Points
- Infrastructure is growing as an asset class, with more than $500 billion raised globally in the last five years.
- While some investors may see infrastructure only as power and utilities, it’s grown into an ever-expanding universe with a much wider set of products.
- The drive to net-zero will spur a multi-decade boom in infrastructure investment.
- The definition of infrastructure is likely to continue to grow, taking in even healthcare and leisure sub-sectors.
Infrastructure assets have raised more than $500bn globally in the last five years. But despite that growth, many investors remain underweight. While some may think of infrastructure as water pipes and electric pylons, the reality is that it encompasses a wide portfolio of risk-reward opportunities. RBC today offers a much wider set of products for infrastructure investment, because a much wider pool of source capital is needed for new markets and sub-sectors.
The boom is likely to continue in coming decades as the drive for net-zero drives new infrastructure investments. Wind, solar and electrification will be the backbone of this growth, but there will also be newer technologies, from EV charging networks to hydrogen. As investment in these areas grow, this will drive down the cost of capital and spur further investment. But this trend can’t reduce investment in fossil fuels to zero, as hydrocarbons will still be needed during the energy transition of the coming decades.
“We expect to see many existing gas systems converted to produce and deliver hydrogen, which will be a key fuel to support decarbonization of heat for both homes and industry.”
ED GOLDER, HEAD OF UTILITIES & RENEWABLES, EUROPE
But the activity in the infrastructure sector goes far beyond renewables and electrification. There’s a huge focus on digital infrastructure, from the rollout of high-speed fiber to the construction of new data centers, and there’s even interest in new sectors, such as healthcare and leisure, where businesses offer some of the same characteristics as more traditional infrastructure assets.
