Infrastructure investment has become a hot topic. Why do you think that is?
The reason is because this is a nascent market. The need for infrastructure investment is rising, but governments don’t have sufficient means to self-fund so many capital-intensive projects. Investors are becoming interested, but they are often unsure what to think of this new beast. Infrastructure investing has long been the racehorse that lagged. Now it's passing the field, and that draws a lot of attention.
So is the pie big enough for everybody?
The need for infrastructure funding is sufficient to satisfy most investors’ needs, but not all projects are born equal. One has to separate the wheat from the chaff but the time has never been better for governments to seek financing for relevant projects.
What's the risk of infrastructure as an asset class?
There's the danger of definition creep. To be rightly termed “infrastructure,” the underlying asset has to be essential, quasi-monopolistic and well regulated – for example, a hospital financed in public-private partnership. Despite their name, some infrastructure investments are hybrids, so investors unwittingly become invested in corporate bonds.
Timing is clearly crucial. When do you enter a project?
We get involved as early as possible. We're happy to take construction risk, which can be mitigated in the financing structure. But we're less willing to take the risk of whether or not a greenfields toll road can be run profitably.
Assuming that infrastructure is on the rise, where will it stop?
There's no reason why there is a global real estate market but no global infrastructure market. After health care, infrastructure is the only thing that touches everybody, so I believe in time it will become a global asset class.