Why should investors aim at infrastructures?

By Tim Rainsford , Chief Product & Distribution at Generali Asset Management

Infrastructure investments are defensive by nature as they have demonstrated low correlation to economic cyclicality making them desirable particularly during times of high market uncertainty and volatility.

It’s also an opportunity to invest in projects and businesses with real impact on economy and society such as energy transition, development of digital networks, healthcare and education.?

Furthermore because infrastructure is providing a public good and associated with demand of? critical services, the exposure to consumption and demand risk is generally quite limited.

What are Generali Investments’ capabilities in this asset class?

In Generali Investments we have diversified expertise in infrastructure with investments in both debt and equity. Thanks to our affiliates Infranity and Sosteneo Infrastructure Partners , we manage over 10 billion Euros in assets, thus being one of the largest infrastructure investors in Europe.

Infranity’s strategies focus on renewable energy and energy efficiency, sustainable mobility, accelerating digitalisation notably through the financing of fibre optic networks and, last but not least, social infrastructure in the health and education sectors.

Impact investing is rooted in their investment process, and they have a unique, proprietary ESG scoring methodology designed to favour assets that positively contribute to sustainable and inclusive development.

Sosteneo specialises in private equity energy infrastructure with a dedicated focus on greenfield projects related to the energy transition. Sosteneo’s pure-play strategy targets essential new infrastructure projects in OECD Europe and Asia Pacific that accelerate the transition to net zero.

What’s your outlook on infrastructure?

The market opportunities in decarbonization, energy transition and digital infrastructure remain vast, partly because of geopolitical pressures, ranging from friendly near-shoring to energy autonomy, as well as due to direct governmental support, especially in Europe and North America, accelerating those transformations.

Renewables remain a hot topic given Europe and the US are lagging behind their targets. Wind and solar are key areas for further capacity buildout, while the push for biogas, which started from the urgent need in Europe to reduce foreign dependence, will not slow.

Long-term conviction in decentralized energy production, which promotes auto consummation systems, coupled with more integration into local communities, will require significant improvements to infrastructure.

EV charging and decarbonized mobility will continue to attract funding as charge point operators start to demonstrate a penetration track record. At the same time, EV battery recycling has a particularly large potential.

In waste treatment, energy production is expected to attract more attention given energy and circular economy ambitions. Datacentre construction and hyperscale ought to flourish as the AI wave intensifies in North America and is set to reach Europe.

New technologies will attract more attention, although near-term growth opportunities such as gigafactories or hydrogen need to prove their long-term business case.

In conclusion, both equity and debt infrastructure investments are set to enjoy a prosperous year thanks to a proven track record of resilience, long-term financial and political tailwinds, and particularly attractive entry points.