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Alternatives

Sizing Up The Opportunities

December 2018 - 16 min read

In this Citywire supplement, Barings’ Rick Spencer discusses the opportunities his team is seeing to invest private capital in real assets.

SEEKING OPPORTUNITIES ACROSS ENERGY AND POWER GENERATION
There is a vast opportunity to invest private capital in real assets—from commodity reserves and production assets to the physical infrastructure that is critical to transporting, storing and converting those commodities to a usable form in the real economy.

The investment opportunity is supported by several long-term macroeconomic trends that we believe will serve as tailwinds to the asset class giong forward. Consider, for instance, global population growth. The global population is expected to reach 9.7 billion by 2050. This projected growth has significant implications for the real assets market. For one, surging populations increase requirements for basic infrastructure to support the movement of people and products, as well as next generation, high-tech infrastructure to deliver digital connectivity. At the same time, a rising global population increases demand for basic services, including electricity and heat, thereby driving demand for commodities like oil and gas, as well as for newly competitive renewable energy solutions. In order to support this growth, the demand for energy midstread assets such as pipelines, import and export terminals and storage facilities is expected to increase.

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