Achal Bhuwania, Equitix: At the frontline of the infra boom

Established in 2007 by Geoff Jackson, Nick Parker and Hugh Crossley, Equitix has made more than 300 infrastructure investments and manages several funds with 25-year investment periods. Achal Bhuwania, chief investment officer, says the group has a long-dated investment time horizon that naturally complements infrastructure. “Investments are expected to have common characteristics of high levels of contractual underpinning and limited revenue risk with high-quality assets,” he adds.

Equitix has developed an investment and operating expertise in six main target sectors, including social infrastructure, transportation, renewable energy, environmental services, network utilities and data infrastructure. It focuses on both greenfield and brownfield investment in Europe, North America and the Middle East.

“Equitix has been extremely active over the last year, increasing AUM [assets under management] by around £1bn, and benefiting from UK and European governments’ focus on rebuilding infrastructure,” Bhuwania says. “Equitix has continued to access operational core infrastructure assets on attractive terms, especially where capital and deal activity in the mid-market has been challenged in the higher interest rate environment seen in recent years.”

This new environment is important since Equitix emphasises downside protection through diversification across sectors and risk profiles. “More challenging market conditions with volatility in inflation, interest rates and the wider political and labour market context have illustrated the resilience of well-diversified infrastructure portfolios,” he explains.

This diversification has been underscored by a series of key deals over the past year (see box).

Shifts in infrastructure capital

What is the background to all this activity? “Over the past two to three years, we have seen a big shift in the allocation of capital within infrastructure due to a higher rate environment, especially in terms of the sub-strategies within infrastructure that have attracted capital,” Bhuwania says.

“Mid-market and core infrastructure strategies have been relatively less well supported in terms of fundraising. Closed-end funds have been distributing less capital as realisations and returns have been depressed, as seen in the private equity market. Large-cap fund infrastructure funds have dominated the fundraising environment, which has had a knock-on effect on deals and pricing.”

Equitix believes that mid-market opportunities in Europe will continue to be abundant and attractively priced for those with the local presence to originate and execute deals. In this context, the group has invested more than £3bn since early 2023, which Bhuwania says “is evidence of the opportunity in the mid-market, as well as validation of our local origination networks”. 

This, in turn, led to a shift in the group’s distribution strategy. In October 2024, it announced the opening of a new office in Tokyo to add to the established office in Seoul. “Equitix continues to build out its capabilities across the Asia-Pacific region, where we see growing interest in investment into UK and European infrastructure,” Bhuwania adds. 

Equitix also made two major hires this year – Ted Frith from GLIL, an infrastructure fund set up for UK local authority pension funds, and Simon Davy from Local Pensions Partnership Investments. Frith joins as head of UK business development and Davy as head of investments.

The infrastructure market outlook

“Despite macroeconomic volatility, the outlook for infrastructure remains fundamentally strong,” says Bhuwania. “Investors are increasingly looking to the asset class for downside protection for total returns, inflation protection, cash-yield stability, and to help facilitate the transition to a lower carbon emission energy system. The policy-driven tailwinds – particularly around net-zero targets, energy security, and digital connectivity – are creating unprecedented demand for private capital in infrastructure.”

However, the landscape is evolving, and Bhuwania does see several challenges. “Inflation and interest-rate volatility is an issue. Rising interest rates have materially impacted liquidity in the market, especially in the mid-market [and they] have recalibrated valuations and made capital discipline even more critical”.

He also decries “regulatory uncertainty in some jurisdictions, particularly around investment costs and returns”. He says: “This requires active risk management. Investors need to understand government objectives over several decades, not just the short term. It is also essential to have consistency in policy formulation and avoid frequent policy shifts that could impact investor confidence.”

In the immediate future, “there is an excellent opportunity to invest in high-quality operating assets in the mid-market segment at highly attractive returns compared to the pre-COVID vintage of investments”, Bhuwania adds. “This leaves Equitix well positioned to deliver infrastructure at scale with key commercial and public sector partners in greenfield.” Outside of auction processes, Equitix is also “capitalising on its local presence and wide asset base to originate and secure assets at attractive returns.”

“With the right origination and structuring approach”, Bhuwania sees continued opportunity. “Governments face constrained fiscal positions, elevated national debt levels and a desire to promote investment into critical infrastructure,” he continues. “This plays to our strengths and Equitix’s track record in delivering and managing greenfield projects, our project delivery expertise and our proven approach to partnerships.”