Investments in Infrastructure: realities are changing faster than ever
Current megatrends bring great potential for investments in the sector. Zeeshan Ahmed, Partner at EY and Infrastructure Leader shares his views.
Renowned as a preferred choice for the domiciliation of investment funds and managers, Luxembourg has a lot to offer in the infrastructure funds segment as well. As a diversified financial centre offering a full range of products, Luxembourg is the leading cross-border hub for alternative funds business. Within alternative fund business, infrastructure is one of the fastest-growing asset classes.
Infrastructure, at the crossroads of many disruptions
The Infrastructure sector is at a crossroads of many disruptions, driven by a growing population, changing needs, shifts in capital availability, evolving social and environmental behaviour, technological transformations and rapid urbanization. On top of it, the Covid 19 pandemic introduced an altogether new set of challenges but also brought new opportunities and investment needs. It will take a while to see the full impact of the Covid 19, but the “resilience” of our infrastructure has emerged as an important topic for politicians, regulators, and asset owners.
“Against this background, I believe the pandemic has somehow created a shift in the way governments, asset owners and managers look at resilience risk as part of acquisition, development, and monitoring processes. No longer are decisions being made solely based on probability and expected cost, but rather on ensuring that a jurisdiction’s essential services continue to operate under all scenarios”, says Zeeshan Ahmed.
Advising the different stakeholders in their infrastructure strategy is the essence of the newly created EY Infrastructure sector, led by Zeeshan Ahmed, Partner at EY. The integrated teams are specialised in advising regulators, investors and managers on strategic, financial and operational matters for medium and large-scale infrastructure projects in Luxembourg and beyond. Examples of infrastructure projects being roads, airports, digital, renewable energy plants, and many more.
A unique set of opportunities and challenges
The pandemic – rather than distracting us from the need to drive a sustainable future – has reinforced that imperative. Priorities such as ESG, sustainability and the social impact of investments are now at the centre of infrastructure investment strategies. The transition to a decarbonized future being critical to the long-term resilience of societies, the economy and the planet as a whole.
Technology in infrastructure was already a key industry trend pre-COVID 19, but now it has taken on a more profound purpose and speed: to ensure the continued operations of critical infrastructure in the event of future crises and pandemics. Technology in infrastructure is no longer a ‘nice to have’; rather it is a critical element in the ability to deliver sustainable and resilient infrastructure.
“In these uncertainties and transformations, it is a big challenge to make the right investment decision. However, waiting for more clarity is not a viable option. At EY, we advise our clients in seizing the right opportunities to support our clients and our societies.
Over the coming year, due to continuously changing variables, I expect infrastructure planners, developers, and managers will go with a more agile and flexible approach. At the same time, infrastructure planners will also need to focus much more on leveraging technology, data, and private sources of capital.”, concludes Zeeshan Ahmed.
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