- DWS considers the importance of a realistic view of valuations in an investment cycle in the maturation process.
- Technological change represents a key factor for the infrastructure sector.
- The firm believes that there may be opportunities in assets in strategic areas of the sector, particularly in the intermediate market, with resilient infrastructure profiles that support profitability.
By Funds Society, Madrid
DWS has presented the new edition of its European Infrastructure Strategic Outlook report for 2019, which describes how long-term key megatrends, including digitization, urban, demographic, environmental and technological changes, influence investment in infrastructure. According to the conclusions of this last document, the disruptive technology will be one of the driving forces of the European infrastructure market.
According to Hamish Mackenzie, head of infrastructure at DWS , “technology is a true driver of innovation and active management of portfolios, either in terms of improving revenue generation or cost control, making the assets more efficient. “The report highlights five key points that will drive the European infrastructure market and its investment in 2019:
- Technological change represents a key factor for the infrastructure sector, since 5G, battery storage, smart grids and electric mobility promise to offer more opportunities for long-term investors in the future, as technologies mature.
- “We expect more opportunities for telecommunications infrastructure as digitalization continues to generate strong growth in data demand, supporting the fundamentals of fiber networks and telecommunications towers,” says DWS.
- The firm argues that utilities are refocusing their business models on new services, and becoming increasingly greedy, targeting smaller players in the energy efficiency, demand-response and smart grid sectors to acquire innovative technology.
- In addition, from DWS state that “we observe an acceleration in the effect that technological change is having on transportation, with electrification that drives investment in electric mobility, such as electric vehicle charging networks (VE), and digitalization that redefines the concept of urban mobility through car sharing and ride hailing applications. “
- Finally, technological change is also supporting the creation of a more sustainable infrastructure platform, which contributes to a rapid transition to a low carbon economy and resists climate change.
The DWS report highlights the importance of a realistic view of valuations in a maturing investment cycle, and identifies assets that provide flexibility to manage income, costs and capital expenditures to preserve value in the event that market conditions evolve.
Considers that there are opportunities to acquire assets in strategic areas of the sector, “particularly in the intermediate market, with resilient infrastructure profiles that support profitability, and where favorable trends provide a platform for active management and the creation of long-term value “, The DWS report points out in its conclusions.