Multi Asset Boutique

Including infrastructure in portfolios – listed vs unlisted


If you suffer from pandemic-induced cabin fever, you would be even worse off without your super-fast internet and your daily chat with colleagues. Even pre-Covid, our reliance on infrastructure piqued the interest of equity investors in telecoms, transport or property companies. As the prospects of other asset classes appear to be diminishing, the infrastructure sub-segment looks set to be shining brighter.

It is no surprise the listed infrastructure, i.e. publicly traded stocks of infrastructure has become a bit of a buzzword in investing circles. Such companies are typically active in areas such as communications, utilities, transportation, and energy. They provide essential services, possess business models that aren’t easily copied by competitors, and operate under long-term contractual agreements. We believe that these qualities contribute to highly visible, less variable, and more stable revenue streams and earnings growth potential relative to traditional equities.

According to a recent issue of the GLIO Journal1, a publication of the Global Listed Infrastructure Organisation, approximately 57% of investors surveyed expected to increase their investment volumes in infrastructure over the next 12 months. Further, the magazine highlights the commonalities of and differences between listed and unlisted infrastructure2, the latter being private equity investments, for example.

We favor publicly traded shares, but some investors prefer the unlisted path, so this is a discussion worth having. In a nutshell, what are the pros and cons of either?

Infrastructure investors often hold the same assets, regardless of which avenue they choose. It matters little in terms of regulatory oversight or long-term performance whether you pick listed or unlisted. However, valuation principles, and therefore, the perceived volatility, are different. Among the advantages of listed infrastructure, in our view, are transparency, liquidity, valuation, easier capital market access, a large investment universe, as well as the possibility to better integrate sustainability aspects.

1. GLIO Journal, issue 08, 2021.
2. GLIO Journal, issue 08, 2021, page 16-24.