QUAERO CAPITAL has made significant investments in the infrastructure sector, both in listed infrastructure and in the financing of projects in private markets. This asset class offers a number of advantages in terms of both the nature of the investments and the specific characteristics of the sector. In any case, including a portion of infrastructure in a diversified portfolio seems very appropriate in the current environment.
key advantages
First of all, infrastructure is one of the sectors of the economy that will attract the most private and public investment over the next few years. Whether it is financing the energy transition or digitalising our economies, colossal sums are being allocated to developing the new infrastructure needed to transform our economies. This transformation is comparable to the various industrial revolutions we have experienced throughout history. What is more, the obsolescence of existing infrastructure, or the lack of infrastructure, will necessitate major flows of investment into the more mature sectors of the economy. These massive flows constitute an attractive opportunity for investors keen to help build the economy and society of tomorrow.
Secondly, infrastructure investment also presents a number of desirable features in the current market environment. Typically oriented towards the long term, investment projects offer very high visibility of financial flows over time and are therefore relatively easy to model. This visibility makes projects attractive and very stable for investors who take on exposure to them. The low volatility of the sector brings significant potential for diversifying portfolios without necessarily abandoning the hope of profitability. Moreover, in many cases, private companies active in infrastructure receive ‘rents’ for making it available. Generally, these rents are indexed to inflation, which helps to protect portfolios from loss of purchasing power and inflation.
the ESG challenge
However, the infrastructure sector has long been rightly regarded as potentially problematic when it comes to environmental and social issues. Because it often involves a very large footprint (i.e. a motorway, airport, utilities, etc.), the development and management of a very large infrastructure requires particular attention to the ESG dimension. QUAERO CAPITAL has developed strong skills and convictions in this area. With our analysts specialising in sustainability issues, we are now able to propose products that comply with the European SFDR directive and are classified as Article 8 for the listed part or Article 9 for project finance. Our involvement in a number of environmental initiatives (i.e. Net Zero Asset Managers Initiative), our adherence to the PRI and the ISR label for our Quaero Capital Funds (Lux) – Infrastructure Securities fund, demonstrate our commitment to responsible investing and give credibility to our ESG approach. Backed by concrete, tangible measures, our ability to quantify the impact of our management with regard to sustainable development criteria is a guarantee of sincerity in a particularly sensitive area.
Our monthly newsletter attempts to give an overview of the different opportunities in our infrastructure portfolios, whether they invest in private markets or on organised exchanges. Our experienced teams have developed strong skills and convictions in navigating this asset class, and we are delighted to pass these on to our clients.