The second episode of Antibörspodden, our podcast on alternative investments, takes a closer look at infrastructure, an asset class that many investors want to increase their exposure to. But why? In this episode, infrastructure pioneer Stefan Glevén shares his insights on the most interesting sectors and the challenges ahead. Host Jesper Roslund from Evli asks if the sweet spot for alternative investments are over now that interest rates are rising.
Antibörspodden, the podcast dedicated to investing outside the stock market, returns with a new episode. This time, “The Anti Bourse Podcast” focuses on infrastructure, which is now experiencing an investment boom. Global assets in unlisted infrastructure funds have increased sevenfold since 2010, reaching USD 1,143 billion in December 2022, according to data from research firm Preqin. A majority of institutional investors also say they have the ambition to increase their exposure to infrastructure. But this hasn’t always been the case. Stefan Glevén was among the first in Sweden to build an infrastructure fund when he started at EQT in the early 2000s. EQT’s first infrastructure fund was launched in 2007 with EUR 1.2 billion. Today, the funds are close to EUR 20 billion.
“20 years later, we see the stable, risk-adjusted returns many infrastructure funds have managed to deliver. So I think it is simply a very good asset class”, says Glevén, chairman Belnord Capital and Slättö, founder of the investment company Geltis and former senior partner at EQT.
Socially critical sectors
Infrastructure investments cover a wide variety of sectors, from the transport sector with ports, roads, and bridges, to the telecom sector with telecom towers, data centres, and fibre, to social infrastructure, such as retirement homes.
What all these sectors have in common is that they are critical to society and are closely linked to changes in society. In the coming years, the entire society will be converted to renewable energy. A transition that will require large investments, 69,000 billion to be exact, according to McKinsey.
“This will not be possible unless we allow the private players to participate and invest,” Glevén says.
Interest rates don’t matter
The media and some analysts may give the impression that it will become more difficult to create a competitive return for alternative assets in the near future as interest rates rise. Glevén believes this is only partly true.
“Absolutely, you can borrow less at a higher cost. But that doesn’t really have any great significance. Private equity is basically an incredibly strong ownership model. You appoint good management teams, good boards and you work on efficiency improvements, you make acquisitions and so on. All this is completely independent of interest rates," says Glevén.
Glevén is positive about the future and believes that the alternative sector will continue to deliver very attractive, risk-adjusted returns at the same level as it has done for the past 30 to 40 years, and higher returns than the stock market. There are two sectors within alternative assets he counts on more than others:
“There are two obvious and related sectors that will grow. One is the energy sector, especially when it comes to energy storage. The other is infrastructure for the technology sector that needs to handle a lot of data. This can be anything from data centres to fibre, satellites, and telecom towers,” Glevén says.
Listen to the podcast in Swedish on Spotify or Apple Podcasts.
For more information, contact:
Jesper Roslund, responsible for alternative funds Evli Sweden
jesper.roslund@evli.com
+46 707 608182
*Preqin Global Infrastructure Report 2022
