Navigating the infrastructure cycle
“It is critically important to select the right asset at the right price…”
Investors see infrastructure as a defensive asset class. This may be the case also in the current market, where liquidity has driven up prices in all asset classes: the fundamentals of infrastructure should remain strong whatever the market environment, as businesses are asset-backed and highly cash-generative, offering stability in a downturn.
However, the previous cycle has taught us some important lessons that we should keep in mind at this point in the cycle.
Today, as with the pre-GFC period, the bull mar- ket generates very high levels of activity, and to achieve target returns, it is critically important to select the right asset at the right price. Managers should remain focused on which assets they pursue and how much they pay. This means appropriate due diligence, asset selection and price discipline are very important, because there’s an increased risk of overpaying.
Read the complete white paper at the link beneath Related Files