Energy & Infrastructure Insight - Issue 2

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ARE YOU EXPECTING TO SEE GROWTH IN CERTAIN AREAS AND SECTORS? WHY DO YOU THINK THIS MIGHT BE THE CASE? Digital - digital infrastructure and the continuing investment into fibre and data centre assets is one area we expect will continue to grow. Europe has not caught up with the U.S. in terms of its focus on data centre investment as part of infrastructure and equally the U.S. has had less of a focus on fibre as an infrastructure asset. In both cases, this is largely due to the way these business are currently owned and operated. "Core plus" - investors are generally exploring what assets they can fit into the "core plus" bucket, as mentioned above. During 2019, we saw a number of deals in assets not traditionally considered infrastructure (e.g. healthcare, care homes and nursery schools) and expect this creative expansion of the definition to continue in 2020. 19 FOR MORE INFORMATION PLEASE CONTACT: TIM SHEDDICK Partner London T +44 20 7655 5657 tim.sheddick@ LOOKING AT THE SPECIFIC AREA OF AIRPORT INVESTMENT, HOW IS IT EVOLVING AND GROWING? IS THE PACE OF CHANGE INCREASING AND IF SO HOW DOES THIS IMPACT DEVELOPMENT STRATEGY, FINANCIAL PLANNING AND RETURN EXPECTATIONS? In Europe, there is currently a smaller pipeline of brownfield airport transactions following a fair amount of activity in the airport sector in previous years (although there is still the potential for a number of significant transactions). In terms of growth, we expect to see this coming from emerging markets including Brazil, Latin America, Africa, Asia, India and Indonesia. This is due to a developing middle class in these markets resulting in people wanting to travel more and take more flights, and therefore a need for more airport capacity. This is therefore where the airport operators are currently focussed in terms of growth. However, these can be challenging jurisdictions to do deals in. In the long term, climate change could have a huge impact on airport investments. There is a growing trend, particularly in the developed world, of people seeking to fly less frequently (or at least until aircraft manufacturers can develop lower carbon emitting aircraft). In Europe, there is potential for a carbon tax to be applied to every flight (which would increase the cost of flying and therefore could impact passenger numbers). Some airline operators are likely to try to take the lead on the reduction of carbon emissions from aircraft rather than having a carbon tax or similar imposed on them but others seem willing to wait and see what happens. Airport operators are already making great strides to make their airports carbon neutral and this trend will continue. TOM POUND Senior Associate London T +44 20 7655 5056 thomas.pound@

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