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The Infrastructure Investment Frenzy: Billionaires Lead the Charge

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Billionaire investor and CEO of the world’s largest asset manager, BlackRock, Inc. (BLK) – Larry Fink – recently spearheaded the acquisition of a major infrastructure business, Global Infrastructure Partners, to the tune of approximately $12 billion. Fink’s strategic maneuver is only the latest headline in the broader narrative of financial powerhouses—such as Brookfield Corporation’s (BN) and Brookfield Asset Management Ltd.’s (BAM) Bruce Flatt—pouring hundreds of billions into infrastructure. These bullish moves, echoed by asset management titans Blackstone Inc. (BX), KKR & Co. Inc. (KKR), Ares Management Corporation (ARES), The Carlyle Group Inc. (CG), and Apollo Global Management, Inc. (APO), are indicative of a larger trend that is reshaping the investment landscape as we know it.

In this article, we will dissect the reasons behind the unprecedented surge in infrastructure investments and handpick some of the best infrastructure investment options at present.

The Driving Forces Behind Billionaire Investors’ Infatuation with Infrastructure

Behind the scenes of this frenzy lie five crucial ‘D’ factors, propelling the ongoing influx of investment into the infrastructure domain:

  1. Demographics: The global population, especially in leading economies, is swiftly aging. This demographic shift has catalyzed a heightened demand for stable, cash-generating investments capable of providing attractive, resilient, and inflation-proof yields, essential for funding retirements. Infrastructure, with its mission-critical, highly contracted, and inflation-resistant nature, stands out as an asset class tailor-made to meet these portfolio needs, making it an irresistible target for asset managers aiming to cater to client demands.
  2. Development: Rapid economic expansion in Southeast Asia and Latin America has intensified the demand for infrastructure in these regions. Meanwhile, in established economies like the United States, there is an urgent need to modernize existing infrastructure, spanning airports, bridges, highways, and the electric grid. While the recent passage of an infrastructure bill attempts to address these concerns, the scale of the requirement will ultimately necessitate a substantial infusion of private sector capital to comprehensively overhaul the nation’s infrastructure.
  3. Digitalization: The fourth industrial revolution has triggered a surge in the demand for digital infrastructure, including telecommunication towers and data centers. Alternative asset managers are collaboratively investing with specialized companies to expedite the expansion of their digital infrastructure in response to the escalating demand, particularly driven by the rapid growth of artificial intelligence.
  4. Deglobalization: With a pronounced shift towards reshoring manufacturing and critical infrastructure, particularly to disentangle from heavy reliance on China, there is a renewed impetus for infrastructure development in the United States and Western Europe. Notably, companies like Intel Corporation and Taiwan Semiconductor Manufacturing Company Limited are establishing chip factories in the United States as part of the nation’s pursuit of semiconductor self-sufficiency.
  5. Decarbonization: Global efforts to curtail carbon emissions are driving substantial demand for increased production of renewable energy. This translates to a necessity for hundreds of billions—if not trillions—of dollars in additional investments over the coming decades to significantly amplify the production of solar, wind, nuclear, and other low-carbon or carbon-free energy sources.

Our Prime Infrastructure Selections

While infrastructure consistently reigns as our top long-term investment theme, a couple of opportunities presently emerge as exceptionally well-placed to reap the benefits of the aforementioned bullish infrastructure trends:

  • Brookfield Infrastructure Partners L.P. (BIP) and Brookfield Infrastructure Corporation (BIPC)

BIP’s diversified exposure to midstream, utilities, transportation, and data sectors underpins its stable cash flow profile, rendering it an ideal investment avenue for retirees seeking stable and resilient cash flows. Furthermore, its robust contracted cash flow structure, coupled with substantial inflation indexation, fortifies its defensive and inflation-resistant characteristics. The company’s extensive and diversified presence across the United States, Europe, and emerging economies positions it favorably to capitalize on the prevailing investment dynamics in both developed and developing economies. The company’s expanding involvement in the data sector, including investments in towers, semiconductor manufacturing, and

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