Financial investments involve an element of risk. For further information, please see the risk warning section.
Investing in infrastructure equity offers a secure income alternative that can achieve attractive risk adjusted returns—often inflation-linked—whilst providing stable and predictable cashflows. These returns are at significantly higher yields than comparable index-linked gilts or corporate bonds. The primary distinguishing feature of our approach to unlocking value is by investing in unleveraged assets through sector specific strategies where we have a competitive advantage.
We buy the whole of the project or asset in a transaction, without using third-party debt tranches. This “unleveraged” approach enables us to source and originate deals which may require more flexible funding or other bespoke approaches. We therefore avoid most competition from ‘traditional’ equity infrastructure funds, many of which currently have significant ‘dry powder,’ yet are all looking to invest in similar assets. This enables us to achieve very attractive asset pricing and largely mitigates the impact of significant yield compression seen in recent years. As a result, our strategy allows us to generate predictable, long-term, often inflation-linked, income streams from assets with terms of up to 30 years with relatively low economic risk.
We focus on areas where an unlevered approach provides an enhanced risk / return profile over conventional debt / equity structures. Limited competition allows for appealing returns.
Head of Infrastructure Equity
- In 2013, we built the first institutional portfolio of small-scale solar PV assets. We now manage portfolios which contain over 24,000 sub 4kW installations
- In 2016, we completed our largest transaction to date, investing over £140 million in a portfolio of onshore windfarms
- In 2017, we completed our first rural fibre broadband deal, where we financed the rollout of a network of ultra-fast fibre optic networks in the rural area near Bath
Source: Aviva Investors data as at 31 December 2017
Sample transaction: Energy centre
- Combined heat and power station for an NHS hospital
- Heat output from power generation distributed locally, reducing total energy costs compared to supply from grid
- Investors own the asset; leased to user
- During the construction phase, the specialist EPC contractor took on the construction and operation risk
- Now asset is operational and performing according to business plan, generating a long-term, inflation linked revenue stream
- No residual risk; energy centre reverts to counterparty at end of lease term
|Investment size||£15 million|
|Title||Ownership and lease of asset|
Where funds are invested in infrastructure, investors may not be able to redeem any units in the fund when they want because infrastructure assets may not always be readily saleable. If this is the case we may defer a request to redeem units.
Certain assets held in the fund could, by nature, be hard to value or to sell at a desired time or at a price considered to be fair (especially in large quantities), and as a result their prices could be very volatile.
The frameworks for managing essential infrastructure services can change.
The value of an investment and any income from it can go down as well as up. Investors may not get back the original amount invested.
Learn more about Alternative Income Solutions
For further information contact your Client Relationship Director or Rachel Green, Client Solutions Manager
+44 (0)20 7809 6809*
*Calls to this number may be recorded for training and monitoring purposes.