Inspiratia InfraTech Takeouts

Luca Gatto, head of infrastructure at Japanese lender SMBC, said banks are
even less keen on the kind of technology risk, volume risk, demand risk and
pricing risk that highly technology-intensive sectors bring with them.
However, he added that for many market players, a starting point in tech has
been to look at existing sectors that might be undergoing digital transformations.
Government backing
The UK government is playing a central role in the development of two
technology-led infrastructure sectors through the creation of two public-private
investment funds.
The first – the Digital Infrastructure Investment Fund (DIIF) to support the
broadband rollout – saw Amber Infrastructure, Infracapital and M&G selected
to manage three separate vehicles last July [2017]. The Infrastructure & Projects
Authority (IPA) is now preparing to launch a follow-up to service the EV
charging market.
Axel Jaegle, commercial specialist at the IPA, said the idea behind both funds
was to catalyse private sector investment and send signals to the market that the
government was supporting the sector.
In the case of broadband, he added, the sector had been less popular as
an investment theme among infrastructure investors when the IPA first started
marketing the DIIF in 2015, but is now seen as an established asset class in its
own right.
Once a manager has been selected for the EV charging fund, Jaegle said the
IPA could turn its focus to a third investment vehicle aimed at another emerging
asset class – cleantech.
Investment demand
The government's involvement in the broadband and EV charging markets will
not please everyone – some will say it is up to investors to price risk and fund a
sector's early growth, without the influence of the state.
And in that respect, infrastructure funds have a critical role, according to Patrick
Bossert, associate partner at EY.
"We need some of the big traditional funds to invest in, for example, digitising
rail – that will drive a massive demand for the right digital technologies for
managing markets, capacity and arbitrage, where the venture funds and more
specialised investors can play," he said.
"But we still need the government to unlock the big prize first to enable this
whole market, and something tells me that we're just on the cusp of that
happening."
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