Infrastructure Finance

Accessing future economic development

Opportunities with resilient income streams

Infrastructure is the cornerstone of the economy. It supports economic growth by delivering essential services that are difficult to replicate and replace. These assets cover a wide range of sectors, including airports, telecommunications networks, and traditional and renewable energy.

Many infrastructure assets, such as smart grids, energy storage and fibre networks, are critical for supporting the future development of energy transmission, urban mobility and the digitisation of services.

Potential for consistent returns

Infrastructure assets are funded through a combination of debt and equity similar to any other type of corporation. However, the key difference is that infrastructure provides investors with access to an asset class with a lower correlation to other securities. Given that infrastructure assets typically have high barriers to entry and may be regulated or have an element of government support, they tend to have predictable and resilient cash flows that translate to steady returns for investors.

Characteristics of infrastructure debt:

  • Lower default rates and higher recovery rates than their corporate counterparts
  • Privately placed investments offering potential for enhanced returns
  • Predictable and resilient cash flows
  • Opportunity for access to long-term cashflows for duration matching
  • Solvency II capital discounts for “qualifying infrastructure”

Characteristics of infrastructure equity

  • Physical assets with lower volatility
  • Stable income from millions of end users
  • Potential for capital growth
  • A degree of inflation protection
  • Diversification away from equities and bonds

Other Private Asset opportunities at Schroders

Risk warnings
Past performance is not a guide to future performance and may not be repeated.
The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall.
Alternatives can be more volatile than shares and bonds, and it may be harder to cash in the investment at short notice. Private Assets offer less liquidity than publicly listed securities. Please note: this is not a complete list of risks but rather an overview of some risks.

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