Source: Financial Standard
FRIDAY, 18 SEP 2020 12:09PM
COVID-19 has only served to accelerate the already growing trend towards digital infrastructure, according to Macquarie Infrastructure Partners (MIP).
Speaking to Financial Standard as part of the JANA Annual Conference, chief executive of MIP, Macquarie Infrastructure and Real Assets, Karl Kuchel said the trend was already showing prior to the COVID-19 outbreak.
“We look at COVID-19 as being an accelerator of a data growth trend that was already well-established. I think investors have recognized that digital infrastructure is a key component of a diversified infrastructure portfolio,” Kuchel said.
“It’s now being accepted by a large group of infrastructure investors as providing diversification benefits and potentially a higher growth outlook. It makes sense to have that sort of exposure in a general infrastructure portfolio.”
Kuchel said within the sector there are a whole host of different opportunities, much like in the traditional infrastructure space.
“You can go from lower growth, more yield focused opportunities to higher growth opportunities; you have the same in digital infrastructure,” he said.
“With different types of digital infrastructure assets you have different risk-return characteristics, and so it comes down to what investors are looking to achieve from their investments.”
Kuchel said that as data continues to become a larger part of everyone’s daily lives, the reliance of digital infrastructure will grow alongside it.
“We are consuming more on a personal basis, but also more data is being generated by various other devices and all that is all being aggregated, stored and then used to deliver services, or outcomes, for end users,” he said.
“Digital infrastructure assets, as we work through the pandemic, are not seeing that general correlation with GDP; people aren’t watching Netflix less because of the pandemic. If anything, data volumes are accelerating.”
Kuchel said MIR has been seeing consistent growth in internet traffic in the US, for example, of around 20% year on year pre-pandemic.
“Since then we have seen that growth rate double as people have been working from home, or simply spending more time in a home environment,” Kuchel said.