Infrastructure Investing: A Resilient Alternative in Times of High Inflation and Rates
David Cohen, Partner, Infrastructure Team
Andrew Kirby, Partner, Infrastructure Team
Abhishek Gupta, Principal, Infrastructure Team
Private infrastructure, in our view, has displayed remarkable resilience in an environment characterized by stubbornly high inflation and broad-based expectations that interest rates will stay at current lofty levels for longer than originally forecast. We see many reasons behind such strength: infrastructure is widely perceived as a less cyclical asset class, it has historically outperformed in periods of high inflation, and its long-term prospects we believe remain bullish, bolstered, in no small part, by recently enacted government policy in the United States. But this optimistic scenario is not void of risks, particularly for investments in the large-capitalization end of the infrastructure spectrum, which is currently awash in capital.
As we explore these topics in detail, let’s start with the current investor appetite for the asset class. Over the decade from 2012 to 2022, global infrastructure assets under management increased five-fold. Despite a nearly universal slowdown in fundraising in 2023, managers operating in the space remain flush with dry powder, which has more than quadrupled since 2022, according to data from Preqin.
The full article details:
- How Infrastructure has shown resilience in times of rising and high inflation
- Flexibility and selectivity can be the key
- Finding value in the middle market