Connected Future: investment opportunities in the radically changing infrastructure sector

Technology-driven transformations are not only disrupting our everyday lives, but are also radically transforming the infrastructure sector. On the one hand, innovation is driving an upgrade of existing infrastructure, such as digital; on the other hand, it is determining the emergence of new asset classes like charging points for electric vehicles.

One of the key themes of our 2017 CMS Infrastructure Index was that the more competitive the traditional infrastructure market becomes, the more investors will seek alternative propositions. And, given the fact there is still plenty of capital available, the hunt for yields is increasingly leading investors into new territory.

The ongoing revolution across the infrastructure landscape is already having significant repercussions for market participants, driving increasing demand and opening up a range of new opportunities. In this report, we focus on four sectors that, according to our analysis and experience, represent promising investment propositions in the world of infrastructure.

The starting point of our journey will be digital, which is providing the backbone for digitalisation of the economy. While 4G – the fourth generation of mobile phone technology – has already witnessed robust deal flow, the advent of 5G is set to lay the foundations for a huge range of innovation.

Moving to energy, storage technologies, particularly batteries, are providing a wide range of flexible services required in our increasingly decentralised, distributed and intermittent electricity systems.

Meanwhile in the transport sector, long held as a cornerstone of infrastructure investment, the smart mobility revolution gathers pace. The rise of electrified, connected and autonomous vehicles is likely to represent the most significant transformation of transport since the invention of steam locomotives and internal combustion engines in the 19th century. On top of that, new applications of technology are blossoming, creating efficiencies in public transport, both for users and operators in the form of mobility-as-a-service and digital railways, respectively.

Governments, organisations and investors who understand the interaction between digital, EVs, energy storage and smart mobility, will be the ones to capitalise on the opportunities presented by our connected future.

As our report examines in detail, not all countries are receptive to technology innovations to the same degree, thereby offering fewer opportunities. In Europe the UK is firmly securing its role as a global hotbed of infrastructure innovation, thanks to its forward-looking regulatory framework. While in Asia, Singapore is already becoming a testing ground for new technologies, given its thriving start-up ecosystem and its conducive legislation.