Luke Taylor, Co-President of Stonepeak, joined Julie Cooling, Founder and CEO of RIA Channel, at the CAIS Summit, to discuss the growth of infrastructure as an alternative investment asset class.
Stonepeak is the world’s largest independent investor in private infrastructure assets. Members of the Stonepeak team have seen infrastructure grow as an asset class over the last 25 years. Megatrends driving infrastructure investment include digitalization, supply chain, and the energy transition and decarbonization.
The globe is experiencing digital densification that requires massive investment in digital infrastructure. Investment needs to support supply chains became clear during COVID-19 to support changing trading patterns. About $13 trillion of investment is required to make the energy matrix affordable, secure, and reliable.
Taylor notes that investing in data centers is a great way to play the proliferation of data. Data center networks require connectivity. Equity value is created as larger investments in data center platforms can be made at cheaper multiples.
Many infrastructure investments are designed to provide strong returns independent of macroeconomic conditions. Taylor believes that rates will likely stay high and inflation will be sticky due to fiscal deficits and the tightness of labor and housing supplies.
Stonepeak’s wealth platform offers access to its global infrastructure investment opportunities. Institutional investors often allocate between 1% and 5% of assets to infrastructure, with the longest tenured investors in the space reaching allocations of 10%. Infrastructure is the fastest growing alternative investment asset class, with most private wealth advisors underweight relative to institutional investor allocation levels.
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