Specialist investors: Will the UK’s infrastructure continue to sit in safe hands?

A quiet revolution has swept across British infrastructure over the past decade, as specialist investors have assumed ownership of many of the UK’s most essential assets, including airports, energy distributors, and water companies.

With 56% of water and 46% of energy infrastructure, together with all major UK airports, and most ports, now owned by specialist infrastructure investors, questions are rightly being asked as to whether this trend has driven improvements in UK infrastructure, or whether it has created risks that are as yet unidentified or unforeseen. 

In our latest market study, through qualitative analysis together with interviews of asset management teams, we explore the performance of these essential services over the past decade and the impact that infrastructure investors have had, and consider the challenges that may lay ahead. 

In general, the picture reflects well on investors: the UK’s infrastructure appears to be in safe hands.

1. Asset performance has improved across the board:

  • Water companies have seen leakage levels reduce by 14% over the past decade, equivalent to the amount consumed in Wales.
  • In the same period, electricity distribution operators have reduced supply interruptions by 28% and outage periods by 39%.
  • UK airports are handling record passenger numbers, with improvement plans increasing capacity and improving customers’ experiences.

2. Investors have shown commitment to their assets – reinvesting significantly more cash than previous owners:

  • Reinvestment of profits by water and electricity distribution companies increased substantially, with average capital expenditure increasing by 34% and 112% respectively.
  • In every year between 2004 and 2014, both water and electricity distribution network operators have reinvested more per customer than has been generated in profits.

3. Long-term investment horizons match the UK’s infrastructure needs, meaning investment decisions can be taken without the short-term constraints of corporate reporting or government budgets.

However, the trend towards fragmentation, with assets often owned by multiple overseas investors, presents a greater asset management challenge than seen previously.  New management models will need to be created to ensure that the performance improvement seen over the past decade continues, and the UK’s essential assets remain in safe hands, focused on consumers’ needs.

For further detail on the role and impact of specialist investors in UK infrastructure please click here.

What issues have you experienced in the performance of vital infrastructure assets? Share your thoughts below or schedule a meeting to discuss your situation in confidence.

Colin Smith |  Deals Infrastructure Leader
Profile | Email | +44(0)20 7804 9991


More articles by Colin Smith