How to invest in the next generation of growth

When investors think of Infrastructure, traditionally, they think of assets that have provided essential services for the past 50 years.

TRADITIONAL INFRASTRUCTURE
· Water, electricity, and gas utilities
· Airports, railways, and toll roads
· Midstream networks - processing facilities and pipelines
· Social infrastructure - public facilities and hospitals 

These distinct assets have been around in largely the same format for multiple generations and will likely continue to be for decades to come.

But as societal preferences shift in areas such as climate change and the exponential growth in technological advancement continues, we’re seeing a shift in demand for more sustainable and connected infrastructure – or what we refer to as next generation infrastructure.

Infrastructure to meet the changing needs of society 

Energy Era

The energy transition is perhaps the largest and most notable area of change.

The ‘greening’ of our energy sector requires significant investment and a change in production from our traditional energy-generating assets (fossil fuel-sourced) to renewable energy sources (wind, solar, and hydro).

On the other end of the spectrum, upgrading our outdated and energy-inefficient downstream assets that consume this energy will be a never-ending process as technology improves.

We think there is significant opportunities in distributed energy or behind-the-metre energy, which enables localised users to generate and use their own energy.

An extension of this, is energy-as-a-service, which seeks to decarbonise the built environment through implementing a range of green and energy saving measures and then manage them on long term contracts.

Digital Inclusion

People spend on average 7 hours a day on the internet – so it’s not surprising the need for high-quality, high-speed, and reliable data is more critical than ever.

Traditional telecommunication assets are struggling to keep up with demand, having already reached their maximum bandwidth capacity.

To meet demand for better data transmission, new and improved technologies such as G Fast are being deployed globally.

These technologies have the added benefit of reaching new markets and consumers who were previously unable to access them due to cost or distance.

These technologies are promoting digital inclusion.

Palisade Impact is the largest shareholder in a business called Gigacomm. GigaComm is an innovative telecommunications infrastructure company giving Australian consumers and businesses access to affordable ultra-fast internet. It’s independent, bypassing the NBN, and giving GigaComm complete transparency and control over all elements of its network which enables lowest-cost connection outcomes. 

Circular Economy

Recent advancements in technology have greatly improved our ability to reuse, repair, and recycle existing products and materials.

This has made the circular economy model of production and consumption more sustainable and reliable and created infrastructure-like qualities.

These assets help eliminate waste and lower pollution by reducing our reliance on virgin materials.

Important examples are areas such as organic recycling and the reuse of building materials - an extremely energy-intensive sector.  

We are the largest shareholder in Repurpose It, which we acquired in December 2023.

Repurpose It is a leader in the circular economy – transforming industry waste such as contaminated soil, timber, concrete and food, into products that can be re-used in diverse industries such as major infrastructure works, construction and building and landscaping.

Social infrastructure

It is important to consider new social infrastructure, in relation to healthy and inclusive living, when discussing next-generation infrastructure.

Although technology has played a slightly less prevalent role in this type of asset, recent government policies have now made social and affordable housing more accessible to private investors than ever before.

Transforming the business models in sectors like retirement living, presents a significant opportunity to enable older Australians to remain independent and healthier for longer.

While Palisade Impact has not yet deployed into these sectors, we have a number of pipeline opportunities in the Social and affordable housing and retirement living sectors.  

The $620 billion private infrastructure opportunity

Developing next generation assets requires significant capital investment and effort to be effective. The opportunity across the aforementioned sectors is more than $620 billion.

But investors must carefully choose where to invest, ensuring patient capital is provided to exceptional companies that generate positive social and environmental impacts, as well as significant financial returns over the long term.

Investing in next generation infrastructure can facilitate transformational change and solutions to improve our planet or society. Our strongly held belief is that investing with impact enhances returns, or put another way it drives value, with values.