The future of infrastructure as an asset class

THE infrastructure sector has strong correlations to economic growth and employment creation, both in developed and developing countries. While governments conceptualise and drive the infrastructure in a country, given the size of the challenge, private sector developers, multilateral agencies (MLAs), institutional investors such as pension funds and insurance companies have increasingly become important participants in the infrastructure growth story. The sector is viewed as a long-term funds deployment destination by institutional investors given the annuity nature of such projects.

In 2018, the G-20 launched a roadmap to infrastructure as an asset class, to broaden the sector's appeal. The report highlighted that while the private long-term savings in the hands of institutional investors recorded an all-time high of over US$80 trillion, barriers need to be addressed in the emergence of infrastructure as an asset class.

According to the Economic Policy Institute, every US$100 spent on infrastructure boosts private-sector output by a median of US$13 and an average of US$17 in the long run. Furthermore, every US$100 billion spent on infrastructure would boost job growth by roughly one million full-time equivalents.