Infrastructure investment provides tangible advantages for international institutional asset owners by offering long-duration liability cash-flow matching, protection against inflation and diversification. Given a general search for yield, with a particular focus on finding stable, and ideally inflation-linked, income streams, insurance companies and defined benefit pension schemes have been allocating significant amounts of capital to direct lending. As with other “illiquid assets”, the real challenge has been getting money invested (and so starting to generate meaningful returns), in particular, the time it takes to marry up availability of capital and finding suitable companies to lend to. The absence of a developed derivative market makes it hard for asset managers to “equitise” investors’ cash commitments ahead of drawing down for completed transactions. Defined contribution arrangements have been additionally challenged in being able to invest in infrastructure (and other alternative asset classes) due to overall cost caps and, usually, a need for their platform to offer regular pricing and liquidity.
The Estates and Infrastructure Exchange will be a London-based FCA regulated platform that overcomes these barriers to investment by offering tradeable and frequently/consistently valued debt and equity securities covering multiple global markets, real asset sectors and different sizes of project on a more cost-effective basis featuring standardised due diligence and placement memoranda.