Infrastructure investment industry braced for Coronavirus 'shake-up'

May 18th, 2020 – Fair Market Value Capital Partners discuss how the global infastructure investment industry is affected by the coronavirus

The recent coronavirus crisis in the UK and globally will undoubtably have lasting and far reaching effects on the global infrastructure investment industry, which has historically been viewed as one of the safest long-term investments.

Fair Market Value Capital Partners Founder and CEO Frederic Michel-Verdier, joined other top analysts in the field to warn of a lasting impact that will, as he said: ‘‘Shake-up all sectors, including investing in infrastructure assets’’.

Investing in essential assets

Now more than ever, people are reliant on hospitals and having the healthcare they need. Infrastructure investing is investing in essential assets that most people just take for granted and don’t really think about how they came about. These include bridges, hospitals, water, electricity, roads, airports. Indeed, most GDP-linked assets – such as airports, roads and ports – are now under varying degrees of stress, with airports very much under heavy fire.

Government intervention to keep travel and hospitality afloat

Travel and hospitality are truly in the eye of the storm right now, as much of the world is in lockdown.

When and how that volume will rebound is the more interesting question.

The plunge has been so dramatic, in fact, that the UK-based Airport Operators Association warned some UK airports would go out of business in the coming weeks without government help. But the government initially ruled out supporting airports and airlines with an industry-wide package and said financing measures would be used as a “last resort”.

Infrastructure specialist Frederic Michel-Verdier said: “Transportation assets tend to get hit hard in times of crisis but bounce back relatively quickly once it is over. The difference here is that the intensity and duration of the shock might require government intervention just to keep them afloat until things stabilise”.

Chancellor Rishi Sunak, who announced several emergency measures to support parts of the UK economy, wrote to aviation industry figures to tell airports and airlines to explore liquidity options from shareholders and lenders first, while also using some of the existing support schemes he has announced.

Chancellor Rishi Sunak on providing support during the crisis: “Given the significant importance of the aviation sector to our economy and economic recovery, the government is prepared to enter negotiations with individual companies seeking bespoke support as a last resort, having exhausted other options.”

Mr Michel-Verdier is founder and CEO of Fair Market Value Capital Partners, a new permanent capital platform that targets sustainable equity investments in the infrastructure asset class.

The platform aims to invest all across Europe in major infrastructure assets which target core infrastructure assets in central and eastern Europe. Fair Market Value also provides "core+" infrastructure assets in western and southwestern Europe that focus specifically on the energy transition, transports and digital infrastructure.

By Sarah Brazendale