Investors are showing an increased investment appetite and allocation to infrastructure, according to a new report.
Institutional investors are, according to a survey by Stirling Infrastructure Partners, willing to make commitments to a longer-term investment beyond a 10-year period.
“Although a longer investment horizon comes with increased duration risk, the inflation-linked stable income streams make these investments attractive to institutional investors,” the firm said.
The holding period for infrastructure investments continues to shift towards a longer time horizon, moving from 5 to 15 years in 2016 to 10 years or more 2017 (see image).
Renewables, toll roads and airports remain the top three investment sectors, while Latin America, Asia Pacific and central and eastern Europe show an increase in investment interest.
The survey of 44 funds, carried out between November 2016 and January 2017, found no fall in the level of infrastructure investment expected over the next 18 months, with all respondents predicting either stable or increasing allocations.
Half of the funds surveyed were using a combination of direct investments and asset managers, with most respondents targeting a 5% to 10% return range for infrastructure.
The survey found a preference for equity-only allocation – or a combination of debt and equity allocations – over debt-only allocation.
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