The Opportunity

Infrastructure: An Emerging Real Return Asset Class

Increased institutional investor interest in infrastructure is driven by cyclical and structural aspects. Cyclically, investors are facing an uncertain economic outlook and are seeking opportunities to diversify risk and return drivers. Structurally, National Budgets are also constrained, and thus, looking forward, the demands of fiscal consolidation suggest increased infrastructure investment is needed from pension funds and private institutional investors.

Infrastructure Defined

In the investment context, infrastructure typically includes economic infrastructure:

  • Renewable Energy
  • Transport (rail, toll-roads, ports, airports)
  • Utilities (e.g. power generation, energy distribution networks, water, sewage, waste);
  • Communication (transmission, cable networks, towers satellites)

Lately however, the definition has broadened to include social infrastructure, which includes:

  • Schools and other education facilities
  • Affordable housing
  • Hospitals & Healthcare
  • Prisons

The Benefits of Investing In Infrastructure

  • Diversification Benefits – low sensitivity and correlation to listed markets.
  • Inflation Protection – predictable, inflation-linked revenue backed by long-term public-private partnership contracts
    and “real assets.”
  • Socio-Economic Impact – directly improving access to critical infrastructure for the transformation of developing economies and communities.
  • Predictable Cash-flow Streams – highly cash generative driven by high barriers to entry, inelastic demand for services, low operating costs and high operating margins.
  • Risk Adjusted Return – potential to achieve equity-like returns but with less volatility.
  • Immune to Economic Cycles – relatively low risk.

 

The world over, energy security has taken on an exciting dimension relating to the deployment of clean and renewable energy and South Africa is leading the way in SADC and Africa.  South African institutional investors, are either not yet invested or are below their target allocation owing to the lack of: available investment vehicles, private infrastructure investment opportunities and investor education. Bayakha therefore provides a response to this allocation challenge, providing access to high-quality assets that deliver all the benefits of Infrastructure Investments.

 

Bayakha Infrastructure Partners is an authorised financial services provider (FSP number 47414)

© 2019 Bayakha Infrastructure Partners