Infrastructure assets are an attractive alternative to traditional asset classes, offering sustainable growth and secure long-term cash flows.
Huge pent-up demand for infrastructure investment
Modern and sound infrastructure is crucial for the sustainable development of society and the economy. Both the European Union and Switzerland have a lot of catching up to do in this regard.
The investment and operating costs for the European Union’s Green Deal adopted in 2019 are around EUR 100 billion per year. Its goal is to achieve a climate-friendly transformation of the economy by 2050.
According to a joint study conducted by the Boston Consulting Group and the Swiss Bankers Association, Switzerland’s climate transition will require an average investment of CHF 12.9 billion per year over the next 30 years. That is around 2% of Switzerland’s annual gross domestic product. The desired transition cannot be realised without private capital and private sector involvement.
Infrastructure assets have different value drivers to traditional investments and respond to different risk parameters compared with other asset classes.
Infrastructure projects are capital-intensive and usually have a long useful life. These qualities are supportive for long-term financing.
Infrastructure assets such as locomotive pools or wind farms offer stable returns and regular distributions through long-term supply agreements and regulated price mechanisms.
Explicit protection against inflation exists if this is contractually agreed in the infrastructure revenue streams. There is also partial, implicit protection for infrastructure assets from the rise in the value of the underlying real asset or the increase in turnover that goes hand in hand with rising prices.
Infrastructure investment is often referred to in more detail using the terms core brownfield, value-added and opportunistic greenfield. These describe investment styles (level of potential value creation) combined with the project maturity phase and can already be regarded as components of a strategy.
Core brownfield infrastructure refers to mature, operational infrastructure assets. These facilities often have the character of a natural monopoly, are essential for an economy and are therefore usually subject to state regulation.
Value-added infrastructure also refers to operational infrastructure assets, but with additional capital requirements, e.g. for investment in renewal or expansion.
Opportunistic greenfield infrastructure refers to infrastructure assets in the development phase where demand may be uncertain. This involves the construction of new facilities or the renovation of existing ones.
We are specialist infrastructure investors who focus on core and core-plus transport, utilities and waste management infrastructure. Through our network we ensure we have access to prime investment opportunities in the European market.
We focus on stable assets in sectors we are familiar with and concentrate on strategic joint ventures. When selecting investments, our infrastructure experts largely exclude companies’ operational risks, above-average project risks and aggressive capital structures. This means we have sector-specific know-how, a broad industry network and many years of experience in structuring transactions.
We invest in the trends that will shape our society and economy of tomorrow and allow us to generate impactful returns:
We invest in transport, energy and waste management infrastructure along the entire value chain. We achieve stable returns and distributions in these sectors through long-term contracts or fee models.
We favour existing infrastructure assets, i.e. core assets or projects. They have few operational risks, offer regular cash flows and typically generate stable long-term returns.
We not only invest in different individual projects, but also make sure that we have different counterparties in these infrastructure projects: private, semi-public and public partners. This improves diversification in the portfolio.
In Switzerland and Europe, we can build on many years of cooperation with industrial partners. We work together to develop infrastructure projects with growth potential and a sustainable impact.