Private infrastructure valuations have declined, while competition for deals has also decreased. The ‘biggest election year in history of humanity’ is also behind us, removing some political uncertainty.

Now that the macroenvironment and sentiment have turned more positive, we think the bears are running out of excuses. We remain optimistic about the industry going into 2025.

However, there is also a simple truth – there is no easy money left in infrastructure. Managers need a deep understanding of the underlying businesses to be successful.

A contrarian approach to secular themes

Despite our positive outlook for the industry, we have to ask an honest question – is there herd mentality in infrastructure markets? We think the answer is ‘yes’.
This concern is reasonable, as the same debate is already happening in public markets, where technological disruptions have led to questions about crowded trades and high valuations. Infrastructure is also exposed to disruptive trends and secular themes like the 4Ds – decarbonization, digitalization, deglobalization and demographic change.

To be clear, we remain bullish on these megatrends. We still believe that they will transform our world and provide significant investment opportunities. But it would be dishonest to not acknowledge that there is some hype, especially in clean energy and certain areas of digital infrastructure.

Looking at infrastructure fundamentals though, we notice that consensus earnings (EBITDA) growth for listed infrastructure is quite healthy.

Renewable electricity and data centers are both showing strong growth, which partially explains the positive sentiment. However, what stands out is the strength across all sectors, including roads, waste management and utilities.

You can now read the full whitepaper at the link below