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“Levelling up and getting Britain building”

12 March 2020

Infrastructure managers comment on the Budget announcements.

In yesterday’s Budget the Chancellor announced over £600bn of new spending on infrastructure, the highest level in real terms since 1955. The plans pave the way for record levels of spending on roads, as well as investment in broadband, railways, hospitals, schools, housing and renewable energy infrastructure to boost productivity and growth.

The Association of Investment Companies (AIC) has spoken to managers of infrastructure investment companies to gain their views on the effect of the Budget announcements and their outlook for infrastructure investing.

The effect of the Budget

Philip Kent, Manager of GCP Infrastructure Investments, said: “We welcome the announcement as part of the Budget that the publication of the UK’s National Infrastructure Strategy will occur later in Spring, which will set out plans for a ‘once in a generation transformation of the UK’s economic infrastructure’. The Budget commits to increases in government spending in areas including transport, flood defences, carbon capture and storage, renewable heating and electric vehicle infrastructure, which are likely to generate private sector investment opportunities.  However, we anticipate further detail on the public-private partnership models that will be required to support the material private sector investment in infrastructure the Government themselves has identified will be provided as part of the National Infrastructure Strategy.”

Harry Seekings, Co-Head of Infrastructure at InfraRed Capital Partners, Investment Manager of HICL, said: “Yesterday the Government set out clear ambitions and commitments for infrastructure spending. We await further details on how these plans will be realised when the Government publishes its National Infrastructure Strategy this spring, but we are pleased to see that there is real commitment to investing in our infrastructure – both existing and new – to ensure the UK is fit for the future.”

Recent investments

Philip Kent, Manager of GCP Infrastructure Investments, said: “GCP Infrastructure Investments has made a number of recent investments in the renewables, social housing and public-private partnership (PPP) sectors.  The majority of recent investments have been in secondary assets (i.e. assets that are already operational), as a result of declining public sector support in the sectors historically targeted by the company, including the cessation of PFI and PF2 as models of public-private partnerships and the expiry of the renewables obligation to new applicants.”

Giles Frost, Co-Founder of Amber Infrastructure, Manager of International Public Partnerships (INPP), said: “We have one of the biggest and most mature portfolios, which is helpful when generating reliable dividends for our investors, but we are always keen to add to it where we can do so sensibly. For instance, in June 2019, INPP completed the acquisition of a further 51% shareholding in BeNEX, a rolling stock leasing and operating business in Germany. INPP has been a shareholder in the business since 2007 and our additional investment in a business we already know well will both support BeNEX’s ongoing role in providing high-quality public transport to the areas of Germany that the business services and provide additional investment cashflow to our shareholders. Affordable public transport is critical to reducing global emissions. This investment also delivers important environmental and social benefits and thus contributes to the ‘double bottom line’ that we seek as ethically focused infrastructure investors.”

Harry Seekings, Co-Head of Infrastructure at InfraRed Capital Partners, Investment Manager of HICL, said: “HICL has a portfolio of over 100 investments located in the UK, France, Ireland, the Netherlands, Canada and the USA. HICL invests in core infrastructure, that is essential real assets which are part of communities and deliver resilient cashflows from a protected market position. Recent investments by HICL include the transmission assets associated with the Race Bank and Galloper Windfarm located off the coast of the UK. These investments facilitate the transmission of renewable energy to UK homes, contributing to the UK's transition to a low-carbon economy.”

Infrastructure’s ESG benefits

Giles Frost, Co-Founder of Amber Infrastructure, Manager of International Public Partnerships (INPP), said: “Our purpose as a leading infrastructure investor is to deliver long-term benefits for all our stakeholders. This includes but is not limited to our shareholders. The 130 assets in which we currently invest provide the public with services on which more than 2.5 million people rely every day. It’s that innate social benefit which makes infrastructure an ESG-friendly allocation for investors. Amber’s team of circa 125 infrastructure professionals focus on making sure we’re investing in the right type of infrastructure that continues to provide value for money for the operators and users of our schools, civic buildings, transportation assets and regulated utility-style holdings as well as attractive rewards for our investors. We review all our investments against the UN Sustainable Development Goals and constantly seek to drive environmental and social improvements. That is what makes us responsible investors and active stewards of the assets we invest in.”

Harry Seekings, Co-Head of Infrastructure at InfraRed Capital Partners, Investment Manager of HICL, said: “The Principles for Responsible Investment (PRI) provide a voluntary framework for incorporating ESG issues into investment practice, contributing to a sustainable financial system. In its annual assessment by PRI, InfraRed has achieved the highest possible rating for the past five years, ranking well above industry standards. In addition, the company aligns itself with the relevant UN Sustainable Development Goals and believes its portfolio contributes to advancing these goals whether it’s through the 150 schools in HICL’s PPP portfolio or the transmission of renewable energy through its offshore transmission assets.”

Philip Kent, Manager of GCP Infrastructure Investments, said: “All infrastructure, by definition, fulfils a social purpose and therefore is highly rated on ESG criteria.  GCP Infrastructure Investments has invested over £750m in renewable energy projects since IPO ten years ago, displacing generation from traditional fossil-fuel sectors and the associated greenhouse gas emissions.  In the PFI space, the company has invested in a number of projects in the education, leisure and healthcare sectors, which deliver clear social benefits in their day-to-day operations.  The company’s social housing portfolio provides bespoke accommodation, under a supported living model, for individuals with specific care requirements.”

Outlook for infrastructure

Harry Seekings, Co-Head of Infrastructure at InfraRed Capital Partners, Investment Manager of HICL, said: “Urbanisation, population growth, demographics, climate change and digitisation are placing increasing demands on existing infrastructure and it will require significant new investment to meet the needs of future generations. As a result, we must sustain what we have and finance new infrastructure, to decarbonise our energy, to support an ageing population and to transform our transport systems. But we must also recognise the strain this places on public resources and expertise, and therefore the importance of the role of private capital.”

Giles Frost, Co-Founder of Amber Infrastructure, Manager of International Public Partnerships (INPP), said: “Our outlook for infrastructure investment is, in some ways, the same old helpful story: governments, local authorities, policymakers and regulators are still grappling with an often crippling infrastructure spending gap, whilst simultaneously introducing policies which rely on enhanced infrastructure and connectivity to increase productivity and connectivity. In the midst of this, interest rates are lower than ever and seem likely to stay low for longer.  The stable predictable dividends from infrastructure investing are more attractive than ever in this environment.”

Philip Kent, Manager of GCP Infrastructure Investments, said: “The need for new infrastructure in the UK remains as significant as it was at the time of GCP Infrastructure Investments’ launch ten years ago. Climate change targets have been extended, committing the UK to an unprecedented transformation in which electricity and heat is used and generated, the way people travel and the way in which industry and agriculture will operate over the coming decades. The need to maintain, upgrade and transform the UK’s infrastructure remains as relevant as ever and the private sector is likely to have a key role in the delivery and financing of this infrastructure.”


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  1. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment.  Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 362 members and the industry has total assets of approximately £196 billion.
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