Investing in digital infrastructure post COVID-19

As traditional core infrastructure assets face COVID-19 related headwinds, digital infrastructure assets such as data centres and telecommunications networks - which are benefitting from the shift to remote working, online business and ongoing digitisation - have piqued the interest of pension funds and other investors.

But while digital infrastructure has much in common with traditional core infrastructure, it raises a number of unique risks that investors need to consider.

A traditional core infrastructure asset produces cash-flows to equity owners that are forecastable with a reasonably low margin for error. It also possesses certain characteristics, such as operating within an established and stable regulatory environment, maturity in operation beyond the start-up phase, protection against inflation and minimal risk of obsolescence or disruption by new technologies.