Infrastructure – Feature


What does infrastructure bring to institutional portfolios? Andrew Holt finds out.


New technology Michele Armanini, greenfield managing director of Infracapi- tal, M&G’s unlisted infrastructure equity business, concurs. He highlights several areas where the government needs to do more to make projects viable to institutional investors, with the emphasis on new and innovative initiatives. “When it comes to encouraging institutional investment into sustainable infra- structure projects, the government and regulators must embrace new technologies in a way that enables them to scale quickly and share risk fairly across the public and private sec- tor,” he says.


On a positive note, Armanini has seen examples of this, with the UK government’s development of effective models, such as Contracts for Difference, to support and incentivise invest- ment in sectors like offshore wind. “This level of support and targeted intervention has dropped off substantially, and private


sector investors can now invest in this sector with confidence, knowing they can make an economic return and will not be left with stranded assets,” he adds. George Graham, director of South Yorkshire Pensions Author- ity, argues there are other ways of shifting the infrastructure needle. “The key change that would improve matters here is to find more ways to bring the skills and expertise of fund manag- ers together with the people running projects and to create some template projects that can be replicated fairly easily, from say, one district heating scheme to the next.” It is also a more complicated picture, presenting other chal- lenges. “For UK investors in UK projects, the challenge is often competition from overseas investors with deep pockets,” Gra- ham says. “This is great for the projects, not necessarily good for us as an investor.” In addition, Graham adds: “An increasing challenge, as the


Issue 111 | March 2022 | portfolio institutional | 49


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