“In our view, demand for data will continue to increase due to cloud computing, the Internet of Things and working from home,” Farmer said, with the now “essential” data access service providing a wind favorable to investments in infrastructure in this area.
MLC’s diversified infrastructure portfolio, made up of more than 80 underlying assets, contains around 50 percent “new infrastructure”, he explained, alongside more traditional infrastructure assets like airports. , utilities and roads.
“All things being equal, we believe that companies involved in economic digitalization and renewable energy offer, on balance, better risk-adjusted returns when allocating to infrastructure within a portfolio diversified, offering greater upside potential because they are driven by long-term goals. structural trends,” he said.
Regarding the recent focus on data centers, Farmer said there is some evidence that considerable growth assumptions are being built into the valuations of these companies.
“Therefore, another way to access this theme would be to invest in adjacent areas involved in the deployment of data centers connected by fiber optics to data centers and then to data centers to homes,” a Farmer said.
Ragu Sivanesarajah, co-portfolio manager of the Tribeca Asia Infrastructure Fund, also observed that data centers, which have long been part of the fund’s portfolio, have received particular attention in 2024.
Recent figures suggest that more than $22 billion was invested globally in these assets in the first five months of this year, compared to $36 billion over the course of 2023.
According to Sivanesarajah, while data centers will likely continue to benefit from the artificial intelligence tailwind, a number of other infrastructure subsectors could go unnoticed.
Health infrastructure, for example, will require significant capital to meet the growing needs of aging populations in developed and emerging markets, he noted.
“There are significant barriers to entry there. Not only does it require a lot of capital, it also requires a lot of specialist knowledge, and governments around the world are recognizing that they need to commit to this and will need the private sector to be a partner in this area. » said Sivanesarajah.
“When you find the right operator, you actually get very strong long-term growth projections for this sector. You’ll get a good societal outcome, but you’ll also get a good economic outcome, so I think there are significant opportunities there.
Additionally, with Asia expected to be home to approximately two-thirds of the global middle class by 2030, these economies are poised for significant change.
“What happens when you have a growing middle class like that is they want to travel, so assets like airports are very attractive,” Sivanesarajah said.
“Coming out of the COVID period, their revenues have been depressed, capacity on many routes has still not returned to pre-COVID levels and airfares, for the most part, are significantly higher. On some routes, they are 50% higher than before COVID-19.
“So there’s a good opportunity here where not only is revenue potentially growing, but the number of people wanting to travel is going to increase, and that’s going to be there for several years.”
But Susanta Mazumdar, portfolio manager for Tribeca Asia infrastructure strategy, added that investing in infrastructure is not about “catching a wave”.
“What AI is experiencing with data centers, we don’t know how long it will be around, and as we’ve seen in the case of all cyclical investments, in the technology sector or in any other sector, this comes in waves and it happens in waves. waves,” he said.
Opportunities in clean energy
Sarah Shaw, global portfolio manager and chief investment officer at 4D Infrastructure, said infrastructure offers investors a unique opportunity to capitalize on some of the most exciting growth engines of the next two decades.
Although data centers feature prominently in recent AI discussions, she believes a better way to “play” on this theme is through communications towers and the power sector.
In particular, regarding the energy transition, Shaw highlighted that considerable investment will be needed “if the world has any chance of achieving net zero emissions targets”.
“This is not just a story of developed markets or a story of renewable energy. Without huge investments in networks, the energy transition fails and when you can capture that investment with a regulated return, the theme becomes very attractive,” she said, describing networks as “an investment opportunity under -estimated”.
Tomas Wegelius, partner at Access Capital Partners, also described the energy and utilities sector as an area of strong growth.
It is estimated that between $1.6 trillion and $6.5 trillion in global infrastructure spending will be needed by 2030 to achieve a commitment to carbon neutrality by 2050, he explained .
“Investments in clean energy would need to triple by the end of the decade to keep the 1.5 degree Celsius target in sight. We are therefore seeing significant growth in the volume of renewable energy projects launched and an increased need for financing.
“We are also seeing a greater diversity of renewable energy projects, such as small-scale hydro and solar projects, biogas projects, as well as integrated and flexible solutions such as battery energy storage,” he said. he declared.
In addition, the transport and mobility sector shows strong prospects, Wegelius added, amid a major transformation aimed at achieving carbon neutrality.
“The transition to clean mobility is one of the major challenges of the coming years, creating significant opportunities in the sector,” he said.
