Strong Tailwinds Keep Infrastructure Debt on Course
In this Q&A, Pieter Welman discusses what makes infrastructure debt attractive for investors, how the role of private credit in infrastructure is developing, and where he sees opportunities across the market.
Barings has invested $19 billion in infrastructure debt since launching its business in 2013, and its head of global infrastructure, Pieter Welman, believes the market has much further to go, driven by global megatrends such as the energy transition and an increasingly digital infrastructure. At the same time, cash-strapped governments need the private sector to fund essential works, and investors are attracted to the sector’s essential characteristics. These factors have combined to make infrastructure debt a resilient asset class.
How does Barings define infrastructure?
The definition of infrastructure debt can vary widely among managers, banks and investors. At Barings, we focus primarily on economically critical assets which meet social or economic needs and have the potential to offer stable, long-term cash flows. The definition is important as it brings discipline; a lot of infrastructure assets bridge into other asset classes.
We think of infrastructure debt as encompassing six broad categories: economic infrastructure, such as toll roads and airports; utilities and pipelines, assets which carry water, electricity, natural gas and other fuels; power generation, such as renewable energy assets and EV charging infrastructure; social infrastructure, which can include social housing as well as development of assets like hospitals and schools; midstream and storage facilities; and digital infrastructure, such as cabling and data centers.
