– Infrastructure Investor Sentiment: Investor sentiment towards infrastructure remains cautiously optimistic. A continued theme from last year is that many LPs have moved up the risk spectrum to capture higher returns which are not available in Core/Core+ and the definition of what is infrastructure has been expanded by many. This is a net positive for Value Add. Co-investments continue to be the flavour of the month and Asper’s offering of “co-investment partnerships” (non-blind pool vehicles fully seeded by pipeline of greenfield projects) is welcomed in this context.

– Focus on higher returning strategies: We are seeing more investors understand the benefits of higher-returning strategies, both from a financial and impact perspective. For example, we noticed a deeper understanding of the concept of additionality in greenfield stage investments, which involves adding new capacity of renewable energy to the national energy grid through commitments and investments in greenfield projects. More LPs demonstrate having the flexibility to invest at this stage or at least exploring the possibility more than ever before. Some investors described, for instance, brownfield as riskier to buy into (paying a premium) than to structure a new greenfield investment given this enables control over the risks rather than inheriting them.

– Risk Sentiment: LPs are displaying a nuanced risk sentiment in infrastructure investments. There is a focus on risk mitigation strategies, particularly concerning regulatory, environmental, and climate change risks. LPs emphasise due diligence processes and diversification across geographies and sectors to manage their overall portfolio risk effectively.

– Current LP Sector Focus: LPs are directing their attention towards sectors demonstrating resilience and growth potential, including digital infrastructure, renewables and social infrastructure. Asper’s niche offering in district heating, with its focus on decarbonisation of heat, continues to resonate and investors are very much open to discuss a sector offering with a highly defensive return profile and great potential for growth.

– ESG as a Key Pillar in Value Creation: LPs and GPs are increasingly aligning their strategies with sustainability goals, placing a strong focus on ESG integration across investment verticals. Opportunities and challenges in greenfield development are recognised, with emphasis on structured approaches to mitigate construction risks. Investors opine that despite the difficulty in quantifying the “greenium” associated with sustainability and ESG metrics, there’s a growing consensus that participation in ESG initiatives is becoming truly essential. Not only failing to adhere to these metrics but also the increasing ESG regulations may lead to shrinking buyer universes, thus influencing investment decisions.

To conclude, the consensus view is that Asper’s offering of non-blind pool, greenfield-stage investments (and sector expertise in the district heating sector) continues to be highly differentiated and attractive for specific segments of discerning LPs. This holds particularly true for investors with a dedicated co-investment program or a strategy of allocating to “niche” GPs and strategies, and those with a mandate to pursue high-additionality strategies which are also higher returning financially.