The global infrastructure landscape finds itself at an inflection point. Over the past decade, the definition of infrastructure has dramatically broadened. No longer limited to roads and bridges, power plants and airports, today infrastructure increasingly overlaps with large-scale corporate investment projects.
These projects encompass everything from cellular towers and fiber optic connectivity for homes and businesses, to new technologies supporting the migration of the global economy to renewable energy.
Simultaneously, private capital has become a formidable source of financing, and governments around the world are now appropriating public funds to finance an ever-wider range of critical infrastructure.
Lazard’s latest whitepaper, An Inflection Point for Corporate Infrastructure: How Private Capital, Industrial Policy, and Geopolitics are Transforming Global Infrastructure, explores how a confluence of factors have the potential to meaningfully expand the use of corporate infrastructure globally. These factors include:
1. The Rise of Private Capital: Private capital has become a major influence on the industrial landscape, with large pools of capital available for infrastructure investments across dedicated infrastructure funds, private equity strategies, sovereign wealth funds, and pension funds.
2. Expanding Corporate Appetite for Infrastructure Capital: While corporate infrastructure has long been an area of interest for investors, corporates are showing an increasing inclination to tap infrastructure investors to finance long-term capital investments in assets that mimic traditional infrastructure in their risk and cash flow profile. In many cases, tapping infrastructure capital can provide corporates with a more favorable cost of capital and increased strategic and capital structure flexibility.
3. Industrial Policy and Reshoring: In the U.S. and Europe, growing geopolitical tensions and a desire to “reshore” key industries and manufacturing has led to a flurry of policies to invest in traditional domestic infrastructure and incentivize the reshoring of strategically important sectors, such as semiconductor production and energy transition-related facilities and technologies.
4. Industries Primed for Infrastructure Investment: These factors will impact corporates across industries over the next decade, but especially sectors involved in the energy transition, digital infrastructure, and semiconductor production. In these industries, the confluence of private capital availability and the incentives provided by industrial policy will prove especially important.
November 2022
In this short video, John Buchanan, Managing Director at Lazard, discusses how snarled supply chains and heightened geopolitical concerns are propelling governments to fast-track efforts to bring industrial production capacity back onshore.
