Highways and airports as a great example, but also hospitals, hydrogen networks, communications or photovoltaic parks. Investment in infrastructure is liked as a factor of stability in portfolios, although safe and high returns may be restricted to fewer pockets.
To enter the sector there are two main routes. One is to invest directly in infrastructure. It can be built and operational (brownfield in the jargon) or to be developed (greenfield). If you think about a highway that generates constant income with tolls, since the idea is not to buy a road and resell it the next day to make a profit, which is why they are called illiquid infrastructures. “A direct co-investment can be made, between several investors who want to finance the project, through a fund, debt...”, explains Almudena Mendaza, head of sales in Iberia at Generali Investments. “It is very interesting but you have to be clear about the deadlines, the amount to access and how it is transported,” she warns.
Because it has pros and cons. Among the former, it is less volatile and protects from inflation. “And it has very low correlation with the economic cycle. It is one of the options that best adjusts the risk-return binomial.” For cons, the initial investment is usually high, the liquidity is low and the investment term is long. “It's around 6, 8 or 10 years old.” But this way it counteracts variations in rates, he says. Again, you can choose to go via equity (risk capital) or debt. The returns are approximately 10-12% with equity and 5-6% with debt, “always depending on each strategy.” Although the traditional attracts, "we must take advantage of the opportunities, which may be in battery storage, data centers, the green hydrogen network or biomethane."
Direct investment is more suitable for high or institutional capital. For example, Bestinver has a venture capital fund with 300 million in assets under management. “It is a product aimed at a qualified investor, with a minimum investment of 100,000 euros. In addition, we must take into account the deadlines in which the investment is committed,” comments Francisco del Pozo, director of infrastructure at Bestinver. In this fund there are a minimum of 8 years, with investment in assets in operation in transportation, civil infrastructure and renewables at an international level. “The expected profitability is 8-9% and dividends are around 4-5%,” he details. “The evolution of the environment has benefited, boosting expectations.” Given the opportunities, it is already preparing a second fund.
With the figures that are moving, Mendaza sees it as more suitable for institutional clients, family offices or large assets “seeking to diversify.” Thus, for the most common investor, the easy way out is to opt for listed companies in the sector on the stock market, the other great path. “You convert illiquid into liquid, they are the same assets with more liquidity,” explains Rafael Fernández de Heredia, analyst at GVC Gaesco. “The potential is very high. Governments are increasingly indebted, they have to provide services and they use public-private collaboration for developments.” Regarding areas, “clearly the focus is on the US, Australia and to a lesser extent Latin America.”
To get exposure from here, he raises the cases of Ferrovial, more focused on the concession, ACS, under construction, or Sacyr. Expanding, the Italian Vinci or the French Eifage emerge. “In the next cycle, India would stand out: population growth leads to infrastructure growth,” he predicts. In that market it mentions IRB Infrastructure.
