As an asset class, ‘infrastructure’ evokes images of strength, from concrete and cables to tunnels and turbines. But for three years, its price foundations have steadily crumbled.
Just cast an eye over Winterflood’s daily round-up of the UK’s investment trust sector. If it traded at book value, the renewable energy grouping would be worth £12bn, not £8bn. Energy efficiency names sit at an inefficient 42 per cent below net asset value (NAV). Battery storage plays fare worse.
While some of these discounts might be explained by the dashed hopes of the 2020-21 environmental, social and governance (ESG) boom era (not to mention a dramatic shift in borrowing costs), even vanilla infra-funds look horrible, with both the ‘social’ and ‘economic’ sub-sectors trading about a quarter below their book value.