Infrastructure investing is firing on ‘every single cylinder’
00:00 Speaker A
So infrastructure spending over the last year or two has become sort of shorthand for data centers. But we are here, we talk about everything. Well, when you look at what will drive this spending through 2030. Is it going to be mostly data center, um, and ecosystem, or what are we talking about here? Where does this growth come from?
00:26 Speaker B
It’s interesting because data centers get most of the attention when we talk about infrastructure. But infrastructure is not actually static. You know, we’ve been investing in this asset class for 20 years. When we started people thought infrastructure was all roads, ports, airports and regulated utilities and that was it. And no, there was no digital infrastructure, there was no renewable energy. Um, and then fast forward to today and when you talk about
01:06 Speaker B
infrastructure, you think digital first, then you think data centers. The reality is that infrastructure today is truly firing on all cylinders that it represents. Consider transportation; The capital required to upgrade all our stocks such as ports, roads, airports is huge. You think about energy, all the investments in energy transition, massive, digital, you talked about this, data centers, all the energy to power data centers. This is a huge capital demand. And I think we’re at a point today where the supply of capital is greater than ever before. So infrastructure as an asset class has grown from $50 trillion when we started to $1.5 trillion today, but the demand for that capital is also huge. And again, you know, energy is a big part of this, but you know, there’s really demand for every subsector that we invest in.
02:08 Speaker A
So there is a lot of demand, a lot of capital. This is a special investment, but infrastructure as an asset class is perhaps unique; because it also needs a public component, whether it is policy, joint investment or regulation. So where are we on this front?
02:37 Speaker B
One way to think about this is that when you invest in infrastructure, you have the concept of a core infrastructure, a bit like real estate. Think of it as your roads, airports, electricity and gas. But as you move up the risk spectrum, you have a fundamental upside and added value. If you consider the core, you need government subsidies. You need government contracts. But as we move up the risk spectrum and towards added value, the need to subsidize contracts becomes much less important. And so you’re going to have a lot of different places that will need government assistance, some that won’t. As an investor, we tend to focus on added value where we do not need government assistance. We like to go independently, without subsidies, that is, where we know that what we’re investing in works on its own.
