Infrastructure: Investment for the future
An investment in infrastructure is an investment in the future drivers of economic and financial performance. In fact, the global infrastructure investment requirement up to 2040 is estimated at 94 trillion US dollars across the energy, communications, transport and water sectors.1
We urgently need better energy grids, railways services, and more digitalisation. And the lack of modern infrastructure is something many of us experience every day.
Given the strains on public finances in many locations, the huge investment needs for infrastructure require more private capital to bridge the gap.
What are infrastructure investments?
From data centres, solar farms, and green hydrogen production to hybrid trains, roads, a super sewer and an interconnector – we are invested in many projects and companies to improve today´s infrastructure and be ready for tomorrow.
Infrastructure investments are a form of "real assets" that are crucial to a country's development and often provide essential services to the public such as train services, roads, solar farms, utilities or fibre networks. They cover spending on new transport construction and the improvement of existing networks projects among other things and can support the decarbonisation of many projects and companies. And at Allianz Global Investors, our investments in this sector are helping to build tomorrow’s infrastructure.
Making the right calls
Investing in infrastructure requires a long-term view: hence long-standing experience, reliable partnerships, while being innovative to anticipate future trends and risks are key.
At Allianz Global Investors, we’ve been investing in infrastructure since 2008 on behalf of Allianz and other large institutional investors, so we know the critical role it plays in shaping the future. In that time, we’ve made over 250 investments across 6 continents and have over EUR 50bn assets 2 under management around the world. With that we have built a reputation as a trusted partner for managing complex infrastructure projects.
So, with our scale, heritage and experience, we’re strongly positioned to identify opportunities that offer meaningful returns.
Trends to watch out for
When investing in infrastructure, you should always consider: Digitalisation, Decarbonisation and Demographic change. Simply put, they talk to how we can make infrastructure more renewable, sustainable, and how we can tackle the demographic challenges many countries will be facing soon.
An investment in infrastructure is an investment in your daily life and the future. And we expect to see more opportunities in this sector for investment that help drive the energy transition, digitalisation and transport.
We’ve written a handy introduction, which you can read here.
Discover our major themes
Navigating Rates
A dynamic approach is required as investors adapt to shifting interest rates, inflation expectations and exchange rates. Volatility will likely persist: while we expect monetary policy to become gradually less restrictive than in recent times, higher rates will likely uncover weak points as industries feel the impact of elevated borrowing costs. Visibility of how markets will develop remains limited, even in the short term, and expectations could be upended. But we are confident this environment also creates opportunities.
Diversification is key – across public and private markets – and we have the ideas and expertise to navigate the complexity.
Embracing Disruption
We think it’s time to recast traditional definitions of “disruption”. Once a story for the tech sector, disruption is now all-encompassing as artificial intelligence and other transformative technologies are used widely.
While technology may be driving many of the changes, this new wave of disruption could shape many aspects of our daily lives. There are also geopolitical shifts to watch as China becomes preeminent in high-tech industries like electric cars and India positions itself as an emerging power.
The implications of this new age of disruption will be profound and exponential, and together we can embrace the opportunities.
Achieving Sustainability
Sustainable investing is evolving rapidly. Increased flows rightly come with increased expectations of measurability and impact. The industry is on a journey: from a focus on ESG-led risk management to purposeful sustainability solutions and ultimately to impact investing strategies that contribute to measurable environmental or social benefits.
We believe this direction of travel towards real-world change will be the long-term trend of the decade. With a considered approach to achieving sustainable outcomes, we are alongside you at the different stages of your journey, whatever your ambitions.
Transforming Infrastructure
Infrastructure is key for the development and smooth running of economies and societies, but much of the infrastructure needed tomorrow does not exist today. Private capital can play a crucial role in funding essential projects as huge investments are needed, especially for the transition to greener energy.
Investors have many ways to enter this complex asset class and can pick their spot in the capital structure and the region or duration of the investment. With our expertise and market access we are working with investors today to transform the infrastructure of tomorrow.
1 https://outlook.gihub.org/
2 https://www.allianzcapitalpartners.com/en/media/news/20240321-allianzgi-with-over-eur-50-billion-aum-in-infrastructure
4277250