1、Q4 2023INFRASTRUCTURE PULSEEUROPE AND THE AMERICASWe are now within 12 months of elections in the worlds three top markets for private investment in infrastructure the European Union,United States and United Kingdom.Among many issues facing those seeking election is the need to address the climate c

2、hange emergency and mitigate its impact on the natural,economic and social systems we all depend on.The urgency to reach net zero means there is rising public pressure on governments to modernise infrastructure.Our recent attitudes survey of 22,000 citizens in more than 30 countries round the world,

3、conducted by polling company Ipsos,found that most people in most countries think that infrastructure is not being built quickly enough.And in most countries,a majority think infrastructure can make an important contribution to combating climate change.Given that pressure,there should be increasing

4、opportunities for private capital to fill the infrastructure gap between what citizens want and governments can afford.And with elections looming,this is an opportunity for policymakers to focus on how to increase the attractiveness of their markets in what is a global race for capital.For the US an

5、d UK in particular,2024 represents the last chance saloon for incumbent governments to increase the attractiveness of their markets in what is a global race for capital.Meanwhile in continental Europe,we are entering an important period of implementation as agreements reached at EU level,and commitm

6、ents in revised National Energy and Climate Plans,are integrated into member states national policy frameworks.This Pulse survey demonstrates the need for governments to better attract investment in an era in which higher costs of capital must now be matched by policy,regulatory and funding environm

7、ents that de-risk and ultimately provide competitive returns.The attractiveness of the United States continues to outstrip all other markets,thanks to the fiscal incentives of the Infrastructure Investment&Jobs Act(IIJA)and Inflation Reduction Act(IRA).Canada remains on a par with Europes long-term

8、leaders including Germany(part of DACH),Denmark(among the Nordics)and France,all maintaining strong levels of attractiveness.Favourability towards the Iberian and Benelux countries has slid gently over the last four surveys but is still comfortably in positive territory.The UK a standard bearer for

9、private investment for many years drops into negative territory for the first time.Investors highlight political instability and an unattractive regulatory regime as the leading barriers to investment.Uncertainty around the UK response to the USs IIJA and IRA,and the EUs Green Deal Industrial Plan,a

10、lso continues to play on the minds of investors.However,from numerous meetings and conversations we have held with policy makers to express investors concerns,we are hopeful of steps that begin restoring faith in the UK market.Looking across sectors,sustainable energy remains the most attractive sec

11、tor in both the Americas and Europe,particularly the subsectors of solar,wind and hydropower,reflecting governments efforts to address barriers to greater rollout.However,the US will need to match Europes well-developed tax and regulatory frameworks in high-growth sub-sectors such as renewables and

12、battery storage,in order to attract the investment needed to fully realise the ambitions of the US subsidy programme.Data centres are perceived as the leading opportunity within the communications sector in both the Americas and Europe.In transport,railways and rolling stock have the most favoured o

13、utlook,while the regulated industries of water,gas and electricity have declined.Expectations among tolled roads and bridges,and airports,remain low.In a years time,the political environments in these biggest investment markets could look very different.Nevertheless,given the urgency of transition t

14、o net zero that we all face,GIIIAs ambition is to ensure that business environments for investors are even stronger.FOREWORDJON PHILLIPSChief Executive Officer GIIAThe Infrastructure Pulse,compiled by Alvarez&Marsal in collaboration with the GIIA,is a survey designed to provide a regular temperature

15、 check of sentiments in the sector and emerging trends.The overall market situation continues to be more challenging for Infrastructure investors than in recent years.While inflation has reduced over the 12 months,particularly in the US,central banks are warning that interest rates will need to stay

16、 higher for longer,which is impacting the cost of debt funding and making fundraising more challenging;Credit markets are coming under further strain with longer dated Government bonds showing recent rises in yields due to concerns around ongoing budget deficits and unwinding of quantitative easing,

17、combined with the size of future investment requirements around net zero;and Energy challenges have been less pressing than 12 months ago,although the ongoing Russia-Ukraine war combined with concerns of a widespread conflict in the Middle East have led to recent rises in oil prices which may feed t

18、hrough into higher gas and electricity prices over Winter 23/24.Offsetting these headwinds,the US Inflation Reduction Act is starting to have an impact on green investment and jobs in the US,creating a divergence in investment prospects between the US and Europe.The following key themes have been no

19、ted in the Q4 2023 responses:1.Sentiment around equity fundraising fell sharply in Europe,continuing a trend seen since Q2 2023.There is now a clear divergence between Europe and the US,where sentiment increased in Q4 2023 and is now in positive territory.The US continues to be a focus market for in

20、frastructure investors due to significant infrastructure investment needs and further rollouts of Inflation Reduction Act programs.2.Despite the further monetary tightening seen over the last 6 months,sentiment around infra debt markets edged higher in both the US and Europe and is now neutral overa

21、ll,although this masks a variation in views between different infra sectors and sub-sectors.Broadly,core infra assets in particular those with inflation-protected cash flows remain positive about debt availability,but sentiment becomes negative for certain core plus and non-core asset specific sub-s

22、ectors notably altnet fibre(particularly in the UK)that are now very difficult to debt finance.3.The UKs attractiveness for infra investors fell sharply and is now seen as negative.This is attributed to ongoing concerns around political stability(with an election looming in 2024),the absence of a cl

23、ear strategic direction for certain sub-sectors(e.g water and rail)and quality of economic regulation,coupled with the fiscal stimulus for investing in other countries.4.Germany now rates as the most attractive country in Europe for infra investment,while the US rating is lower than Q2 2023 but stil

24、l strongly attractive for investment.South American and Eastern European market outlook continue to be negative.5.In Europe,investment in regulated water is seen as strongly negative-falling significantly since Q2 2023 due to concerns about low equity returns combined with high investment requiremen

25、ts to improve network performance.By contrast,interest in European sustainable generation assets increased across each of the three sub-categories.6.In the US,the investment opportunity outlook in the next 12 months deteriorated notably for sectors such as seaports and cargo terminals,other transpor

26、t infrastructure,and fibre communication infrastructure.In general,the more capital intensive sub-industries had higher declines in outlook as borrowing costs to fund capex have increased.7.Participants noted they will be divesting more assets compared to Q2 23 with 95%of respondents indicating they

27、 will divest one or more asset.This partly reflects a narrowing of the asset price expectations between buyers and sellers,with respondents identifying at least the beginnings of a re-rating of assets prices over the last 12 months.But disposals are also being driven by funds need for liquidity and

28、a desire to build a track record of successful disposals,with listed funds looking to demonstrate market values in excess of NAV given shares trading at heavy discounts.8.Respondents assessment of the importance of ESG in investment decisions remained broadly unchanged since Q2 2023 in the US and de

29、clined slightly in Europe,despite the impact of the IRA in the US and the interest in investing in sustainable generation in Europe.This was attributed more to having a balanced perspective on investment opportunities in the current market and some pushing out of net zero commitments(e.g by the UK G

30、overnment),providing certain assets with a potential longer-term future,rather than any underlying change in investor sentiment.KEY FINDINGSQ4 2023 INFRASTRUCTURE PULSE1How would you describe your current focus?How would you describe your investment criteria?THE BACKGROUND100%90%80%70%60%50%40%30%20

31、%10%0%FUNDRAISINGINVESTHOLDDISPOSETHE AMERICASEUROPE50%40%30%20%10%0%$/100M$/100-250M$/250-500M$/500-1BN$/1BN+THE AMERICASEUROPE70%60%50%40%30%20%10%0%SUPERCORECORECORE&CORE PLUSCOREPLUS PLUSTHE AMERICASEUROPECOREPLUSWhat is your target equity cheque?2Q4 2023 INFRASTRUCTURE PULSEIf fundraising,how f

32、avourable is the current equity fundraising environment?(-5:extremely unfavourable,0:neutral,5:extremely favourable)+0.11THE AMERICASover 6 monthsover 6 monthsover 12 monthsover 12 months-1.06-0.68-2.06EUROPEFUNDRAISING,DEPLOYING AND REALISING CAPITALQ2 20222.64Q2 20222.29Q4 20220.85Q4 20220.09 Q2 2

33、023Q4 2023-0.15-1.21Q2 2023Q4 2023-0.88“There are fewer players around who can guarantee significant capital to deploy in the UK.We are seeing the impact of the historical investment from foreign infrastructure capital over the last decade,current incentives to invest in other countries,and depresse

34、d medium-term UK growth expectations weighting allocations to other countries.”0.20 3Q4 2023 INFRASTRUCTURE PULSEIf deploying capital,how favourable do you consider the infra debt markets for current deals to be?(-5:extremely unfavourable,0:neutral,5:extremely favourable)If deploying capital,how muc

35、h equity do you anticipate deploying in the next 12 months?0%10%20%30%40%50%60%70%80%90%100%$100-250MTHE AMERICAS&EUROPE$250-500M$500-1BN$1BN-2BN$2BN+$100MN/AQ2 2022Q4 2022Q4 2023Q2 2023THE AMERICASQ2 2022Q4 2022Q2 2022Q4 20222.333.13Q2 2023-0.43-0.30-0.67Q2 2023-0.03-0.05EUROPEHow many assets do yo

36、u anticipate divesting in the next 12 months?5 Asset or More4 Assets3 Assets2 Assets1 Asset0%10%20%30%40%50%60%70%80%90%100%THE AMERICAS&EUROPEQ4 2022Q2 2022Q4 2023Q2 2023+0.37+0.13over 6 monthsover 6 monthsover 12 monthsover 12 months+0.19+0.17Q4 20230.14Q4 20234Q4 2023 INFRASTRUCTURE PULSETHE OUTL

37、OOK:2023 AND BEYONDWhat is your outlook for the attractiveness of,and opportunities for,your fund(s)infrastructure investment in the following countries in the next quarter?(-5:extremely unfavourable,0:neutral,5:extremely favourable)43210-1-2-3EASTERN EUROPE(NON EU)EASTERN EUROPE(EU)GREECE AND CYPRU

38、SDACH(GERMANY,ETC.)FRANCEBENELUXITALYIBERIANORDICSIRELANDUKLATAMBRAZILMEXICOCANADAUNITED STATESTHE AMERICASEUROPEQ4 2023Q2 2022Q2 2023Q4 2022“U.S.investment interest continues to be strong,primarily driven by the Inflation Reduction Acts significant incentives for clean energy and companies general

39、desire to become more carbon neutral.”5Q4 2023 INFRASTRUCTURE PULSECommunication infra-towers*Communication infra-data centres*Communication infra-fiber*Other transport infrastructureRailways and rolling stockToll roads,bridges and parkingAirportsSeaports and cargo terminalsOther sustainable generat

40、ion(biomass,EfW)Sustainable other(e.g.batteries)Traditional sustainable generation(solar,wind,hydro)Last mile&metersRegulated gas and electricityRegulated water3.03.52.52.0 1.51.0 0.50-0.5-1.0-1.5-2.03.02.52.01.51.00.50-0.5-1.0-1.5-2.03.03.52.52.0 1.51.0 0.50-0.5-1.0-1.5-2.03.03.53.52.52.01.51.00.50

41、-0.5-1.0-1.5-2.0Q4 2023Q2 2022Q2 2023Q4 2022THE AMERICASEUROPEWhat is your/your fund(s)outlook for overall infrastructure opportunities for your fund(s)in the following sectors in the next 12 months?(-5:extremely unfavourable,0:neutral,5:extremely favourable)*Q4 2022 and Q2 2022 comparison data for

42、communication infra is a combination of all three categories-towers,data centres and fibre.“The UK regulatory models for water and to a lesser extent electricity/gas are in need of reform.The cost of capital is too low,relative to the risks capital and reputational.”6Q4 2023 INFRASTRUCTURE PULSEWhic

43、h of the following do you view as the key barriers when looking to invest?(0:Not important,5:Somewhat important,10:Most important)876543210Uncompetitivetax regime Politicalinstability/sentiment Problems to accessdeals because ofForeign DirectInvestment barriers Lack of clarityon fundingmodels Unattr

44、activeregulatory regime Lack ofvisibility ofproject pipeline REST OF NORTH AMERICAUKUSEUROPEQ2 2023 RESPONSEBARRIERS TO INFRASTRUCTURE INVESTMENT“Instability at the top of UK Government has hopefully passed,but we are still lacking clarity on the future direction of major infrastructure sectors,with

45、 the possible exception of renewable energy.”7Q4 2023 INFRASTRUCTURE PULSEESG AND THE ROAD TO NET ZEROHow important is ESG to you(or your LPs)and how strongly does it influence your investment decisions?(0:not considered,5:balance of factors,10:primary factor)0.0Q2 2023THE AMERICASQ4 2023Q4 20236.46

46、.56.4Q2 20236.8-0.3EUROPEWhere do you see the greatest ESG challenge in the next one to two years?(1:least challenging,7:most challenging)BiodiversityCybersecurityClimatechangeDiversity,Equality and InclusionSafetySupplychainEthicalcomplianceChange in comparison to Q2 20233.205.205.403.903.903.702.7

47、0THE AMERICAS4.194.484.764.193.484.052.86EUROPE“ESG attributes remain critically important;however,other factors such as fiscal policy,geopolitics and regulatory environment are also key considerations.”8Q4 2023 INFRASTRUCTURE PULSEHow much investment do you expect to make in existing or new infrast

48、ructure assets over the next 5 years to achieve zero carbon emissions in your portfolio?0%10%20%30%40%50%60%70%80%90%100%500m$500MTHE AMERICASEUROPE500m-1bn$500M-1BN1-5bn$1BN-5BN5-10bn$5BN-10BNQ2 2023Q2 202310bn+$10BN+Q4 2023Q4 2023Which of the following do you think governments should be most focus

49、ed on in order to encourage greater investment in clean energy/transport/digital at present?(1:least focus,5:most focus)Access topublic sector debtfinance/guaranteesCreating themarket frameworkto stimulate demandRegulatoryenvironment Climate friendlymarket incentivesTechnology readinessthrough publi

50、cinvestmentUK2.813.003.383.192.62EUROPE(excluding UK)2.863.003.293.482.38US2.902.502.503.503.40REST OFNORTHAMERICA2.304.102.702.603.309Q4 2023 INFRASTRUCTURE PULSEABOUT THE GLOBAL INFRASTRUCTURE INVESTOR ASSOCIATIONThe Global Infrastructure Investor Association(GIIA)represents the worlds leading ins

51、titutional investors in infrastructure and advisors to the sector.On behalf of our members,we work with governments and other key stakeholders to promote the role of private capital in delivering smart,sustainable infrastructure.By connecting investors and advisors with policy makers and regulators,

52、we seek to create opportunities for investment in projects and assets that improve economies,connect people,enable energy transition,protect the environment,and tackle the challenges of resilience to climate change and achieving net zero.Collectively,GIIA members have more than$1.6 trillion in infra

53、structure assets under management across 70 countries in six ABOUT ALVAREZ&MARSAL GLOBAL INFRASTRUCTURE INVESTORS GROUPA&Ms Global Infrastructure Investors Group helps infrastructure funds,corporates,private equity,sovereign wealth funds,and family offices with comprehensive infrastructure support t

54、o deliver strategic and practical bottom lines for maximizing the utilization and value of assets.From inception of fund structuring to deal execution,portfolio optimization,through project delivery and asset disposal,our unrivalled team of transaction experts is dedicated to providing an integrated

55、 breadth of service and senior leadership across the entire infrastructure investment lifecycle.Our deep-rooted projects expertise,combined with reputable due diligence capabilities and operational excellence,are unparalleled within the transaction services market.We offer guidance on clients most c

56、ritical project challenges and drive performance in all areas of infrastructure investments,including acquisition and vendor due diligence,risk mitigation,capital efficiency,project execution,financial modelling and cost rationalization.With a global network of more than 3,000 private equity and cap

57、ital projects professionals across the U.S.,Europe,Latin America and Asia,our robust team is comprised of transaction advisory specialists,tax and accounting experts,engineers,former industry operators and C-suite executives,all armed with next-level infrastructure insights to guide you in your next

58、 10Q4 2023 INFRASTRUCTURE PULSECONTACT USJASON CLATWORTHYMANAGING DIRECTOR,TRANSACTION TAX ALVAREZ&MARSAL+44 20 7150 3528MICHAEL FARKASMANAGING DIRECTOR,TRANSACTION TAX ALVAREZ&MARSAL+1 212 328 8493SIMON MONTAGUEDIRECTOR OF CORPORATE AFFAIRS GIIA+44 20 3440 3924WAYNE JEPHSONMANAGING DIRECTOR,TRANSAC

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