Infrastructure Investment Conference September

Investment Infrastructure Conference

Thursday 2

Thursday 16th September 2021 | 10:00-12:00

 

This live, online and interactive conference introduces the audience to fund managers of some of the leading infrastructure investment companies who will present on some of the current themes the sector is addressing.  

 

Essential assets 

Infrastructure assets are such things as hospitals, schools, roads, tunnels, bridges, ports & airports. 

Infrastructure assets are so important for a country that the government guarantees payment to owners/operators.  Many payments are “availability based” (eg for a hospital or school) rather than “usage based” (eg for toll roads). 

 

Legal guarantees 

Most projects are structured as PFI (Private Finance Initiatives) or PPP (Public-Private Partnerships). Most developed countries have PPP laws. 

This has helped encourage private finance and know-how in the design, build, operation and maintenance stages. 

Private companies must stomach significant up-front costs, so to make it worthwhile leases (and government payment guarantees) often last for 25 years or more.  

At the end of the lease the ownership of the project passes to the host country. 

In the UK PFI has been used since 1992, the first PFI project was the (Second) Severn Bridge on the M4, which reached the end of its lease in 2018 and has returned to public ownership (along with crossing tolls being abolished). 

 

Global activity 

The UK now has over 700 PFI projects with a combined contract value of £57bn. 

Canada has 250 such projects, valued at U$100bn.

Projects in the USA are valued at U$80bn and Australia at U$70bn. 

In a 2019 survey by CMS “Bridging Connectivity” Germany is the top country for PPP investment, followed by Netherlands, Singapore, Australia, Canada. The UK dropped from 4th position to 9th after the Brexit referendum. China is 18th. 

 

Capital structure 

Because countries' governments are the ultimate guarantors of cash flow payments to these infrastructure projects the projects themselves are generally assessed as low risk.  

So banks are happy to lend at high loan to value rates. Typically 90% of a project is financed by bank loans. Only 10% needs to be funded by equity investors. 

Since 1973 the European Investment Bank has lent €118bn to fund UK infrastructure projects. This has included funding for major energy projects, transport, water and sewerage, higher education and housing. Exiting the EU means the UK loses this source of funding. A new UK Infrastructure Bank will be set up in Spring 2021. 

 
Investing in infrastructure 

Pension funds and Sovereign Wealth Funds can make direct investments. But retail investors can access too. 

Since the assets are large and illiquid this means they are not suitable for investment by daily dealing, open-ended, mutual funds/unit trusts/OEICs. But these assets are ideally suited for investment by closed-ended/Investment Trusts/investment companies. 

These are companies listed on the London Stock Exchange and can be traded easily via stockbrokers.

The infrastructure members of the AIC have combined total assets of over £10bn. Given the 90% LTV this equates to over £100bn of total Infrastructure projects, with a diverse global spread. 

 

The session will qualify for 2 hours of CPD

Training and Venue Information

CPD Authorised Yes
Event Date 16-09-2021
Event End Date 16-09-2021
Event Time 10:00 - 12:00
Price £0
998