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Pulse Survey Q2 2023: The Americas

Infrastructure investors pledge billions to US net zero investment ahead of Inflation Reduction Act anniversary

  • New study of Infrastructure funds with close to $1 trillion in assets shows significant uplift in appeal of US and Canada as investment destinations.   
  • Concern about environment for debt and equity raising hits highest point in Pulse survey history. 
  • Appetite to invest falls across individual markets and sectors as rising prices, skill shortages and energy costs weigh on plans.

Major infrastructure funds are committing billions to sustainable US investment despite spiralling overheads and borrowing challenges, according to the Q2 2023 Pulse survey from the Global Infrastructure Investment Association (GIIA) and Alvarez & Marsal (A&M).  

Close to four in ten (38%) respondents to the new survey say they intend to spend at least $5bn on achieving net zero across portfolios in the Americas over the coming five years, compared to just two in ten (18%) across Europe.

Asked to score different markets by their attractiveness as investment destinations on a sliding scale of -5 to +5, the US posted an average score of +3.25, higher than any other individual market assessed for the report. The figure is considerably higher than that posted in the autumn. 

Canada also saw an uplift in its ranking in this study compared to the last, recording an average score of +2.06, putting it ahead of European destinations such as the UK (+ 1.14) and Spain and Portugal (+1.59). All of the Latin American countries surveyed for the study posted negative readings.  

For the first time since the survey’s launch three years ago, sentiment towards debt and fundraising has turned negative. Respondents state that the availability and cost of debt financing are now having a greater impact on current portfolios in the Americas than inflation or skills shortages, their next two greatest areas of concern.

As yields on deposits and bonds improve, many are shifting their focus away from ‘core’ assets, offering low risk, stable returns, to higher yielding ‘core plus’ strategies, targeting strong returns and capital appreciation.      

Though appetite to invest has fallen in the round, infrastructure investors continue to put sustainability concerns front and centre, highlighting the appeal of assets in the renewable energy, battery and communication industries.   

GIIA Acting CEO Jon Phillips said: “Our new Pulse study underscores the success of the ambitious infrastructure legislation passed in the US and the positive Canadian Budget implemented earlier this year.

“Funds are still investing despite an uncertain economic and geopolitical environment, but given the scale of future investment needed, it’s critical that governments work with private investors to unlock more of the $500 billion in dry powder that they have ready to deploy.  

“Our members now flag regulatory reform as their number one ask of policymakers in the US, highlighting the need for a holistic approach to crowding in investment, encompassing the welcome green incentives that are already in place.”   

A&M Managing Director and Co-Head of U.S. Energy & Infrastructure Transaction Advisory Group Jay Moody said: “The latest Infrastructure Pulse continues to highlight challenges to infrastructure investors, who are less optimistic about opportunities in almost every market segment. 

“Investors are focused on availability and cost of debt financing challenges which is hindering investment. 

“However, infrastructure investment requirements are only growing due to aging transportation infrastructure, additional communications infrastructure requirements, energy transition, and the push toward net zero.”