Martin Lennon discusses delivering sustainable infrastructure to meet society’s changing needs

The current imbalance of supply versus demand in the European essential infrastructure market is vast. In an environment of increasingly fiscally constrained governments and corporates exacerbated by Covid-19, we see a sizeable investment need driven by macro-trends from digitalisation to decarbonisation.

The digital revolution is gaining momentum with fibre connectivity, now more than ever, a modern day essential. The Covid-19 pandemic has exemplified the need for full-fibre with data usage surging globally amidst increased remote working. Despite uncertainty over what a post Covid-19 world will look like, the consensus is that the need for connectivity will prevail. Digital roll-out has been set as a strategic priority across the UK and large parts of the rest of Europe yet there has been a significant under investment in fibre infrastructure, resulting in challenges in addressing increased demand for data. This appears most pronounced in rural communities, currently underserved by main providers. Addressing the imbalance, Infracapital was an early mover in this space, making its initial fibre investment in 2015 in Gigaclear, now a leading broadband developer delivering high-speed Fibre-to-the-Premises to rural communities across the UK. Infracapital has since supported a vast portfolio of alternative developers of full-fibre across the UK and Europe to both deliver premium returns for our investors and address social inequalities by encouraging greater digital inclusion and removing location as a barrier in an increasingly digital and connected world. 

Supporting the clean energy transition is a further key opportunity for the infrastructure industry with recovery from Covid-19 catalysing the transformation. According to the United Nations Framework Convention on Climate Change, commitments to reach net-zero by 2050 have doubled in less than a year, as cities and businesses alike continue to prioritise climate action in their recovery from Covid-19. There are an abundance of emerging technologies complementing those that already exist to support the net-zero agenda and therefore a wealth of opportunities for infrastructure investors to explore. A notable challenge is to determine which technologies have the staying power and longevity so as not to be superseded in a few years. During 2020 Infracapital made two investments across both our greenfield and brownfield strategies in the Electric Vehicle and energy storage arena. Our greenfield strategy committed £150mn to Zenobe, owner and operator of intelligent battery storage as well as EV fleet services in the UK, already serving c.20% of the EV bus market. Within brownfield we acquired a majority stake in Recharge Infra, owner and operator of public charging points across the Nordics. There remains tremendous opportunity for growth in this key space and we are proud to support the decarbonisation agenda, facilitating growth of sustainable energy related infrastructure. 

You may be familiar with the ambition to ‘Build Back Better’ as we recover from Covid-19, and with that comes a breadth of exciting investment opportunities that look to provide sustainable solutions to 21st century challenges. Alongside this, the UK’s National Infrastructure Strategy and the European Commission have widely recognised the need to mobilise private investment to support economic recovery and bridge the funding gap. Despite the upheaval of Covid-19, the infrastructure asset class has remained largely resilient and with our many years of experience in these key sectors, we look forward to continuing to build, invest and manage essential assets for a more sustainable and inclusive future, creating attractive returns for investors and positive impact to society.