ASSET MANAGEMENT MOVES INTO THE SPOTLIGHT

thE annual gap for infrastructurE financing is $2 trillion globally

The shortfall in government budgets coupled with the derisking of the banking system and an increasing global infrastructure demand have created a gap in infrastructure financing. According to the World Economic Forum, 12 $2 trillion is needed each year to fund global infrastructure. See Figure 4. This means, unless major efforts are undertaken to close the gap within the next decade, the global economy will fall $20 trillion short by 2025.

Emerging economies are in dire need of physical infrastruc- ture to accommodate growing populations and developed countries continue to need modifications and modernisation of their aging infrastructure. Technological infrastructure is an entirely different and equally pressing issue. The sums involved in addressing these problems are staggering, and bridging this financial gap is a primary concern for govern- ments and stakeholders. Asset managers are already acquir- ing such business from banks, in addition to their traditional infrastructure business. For instance, in recent years, several asset managers started buying infrastructure debt when banks began turning away from sizeable government projects.

Figure 4 estImAted gAp betweeN reQUIred ANd ACtUAL ANNUAL INvestmeNt IN INfrAstrUCtUre worLdwIde

3.5

2.5 3.0

2.0 1.0 0.5 1.5 US $, trillions

0.0

Current private infrastructure investment

Investment gap

World investment in infrastructure need

Source:World Economic Forum

12 World Economic Forum,“Paving theWay: Maximizing the Value of Private Finance in Infrastructure,”2010

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