“The charm of infrastructure investment increases when market uncertainty grows from geopolitical crises to ‘tariff wars.’ Investing in infrastructure assets allows for the creation of stable cash flow through dividends, making it advantageous for defense strategies.”
Kirsten Whitehead, a partner in the infrastructure institutional sector at Queensland Investment Corporation (QIC) in Australia, noted that “infrastructure is an asset with high barriers to market entry due to regulation, and it functions as an inflation hedge, allowing price increases to be incorporated into contracts.”
She particularly emphasized the need to focus on energy infrastructure, as countries are strengthening energy security amid rising protectionism. She noted that investments in data centers, which have become popular recently, must first check whether they have adequate power supply networks.
However, she advised that, due to the nature of infrastructure assets, long-term investment is required, and the principle of diversifying investments should be adhered to in order to avoid focusing on specific sectors or regions. On the 20th, an interview was conducted with Partner Whitehead in Yeouido, Seoul, to hear about the outlook and strategies for the infrastructure investment market.
The asset management company QIC, established by the Queensland state government in Australia, is investing in 21 infrastructure assets, including Pacific Energy. Of these, 15 are within Australia, while the rest include energy infrastructure in the United States and Brussels Airport in Belgium. The total assets under management (AUM) in the infrastructure institutional sector amount to $25 billion (around 35 trillion won).
Partner Whitehead studied business and law at the University of Queensland and the University of New South Wales School of Law before joining QIC in early 2010. She manages asset management and large common investment portfolios within the infrastructure institutional sector.
The following is a Q&A.
─What are the representative achievements of the infrastructure investments conducted by QIC?
“A case in point is ‘Pacific Energy,’ Australia’s largest distributed energy supplier. QIC owns 100% equity. While Australia’s land area is comparable to that of the United States, its population is around 27 million. This environment has led to the development of a distributed energy generation system rather than a centralized one. Additionally, the Australian federal government has set a goal of replacing 82% of total energy production with renewable energy by 2030. This investment was decided as Pacific Energy has the capabilities to cover energy infrastructure design, generation, and supply.”
─What are the investment results for Pacific Energy?
“It is exceeding the expected rate of return at the time of acquisition. A hybrid business utilizing diverse energy sources has been added to Pacific Energy’s existing operations, along with a digital business that can be controlled and managed remotely. Additionally, the average supply contract period has been extended from four years to ten years, enhancing stability. When we first invested in Pacific Energy, renewable energy comprised only 2% of the power sources, but now it has grown to 70%. Ultimately, the goal is to expand renewable energy to 99% of the power sources.”
─In Korea, the cost of generating renewable energy is high, and there is considerable variation in generation based on weather conditions.
“Australia has a vast land area and abundant sunlight, making the economics of renewable energy favorable. To solve the intermittency problem of energy sources, energy storage system (ESS) facilities must be supported. Australia will also need to expand its current ESS facilities about sevenfold in the future. Both the central and local governments in Australia are stepping up to provide support.
Since neither the government nor the private sector in Korea can independently establish renewable energy infrastructure, it seems important to create a cooperative framework. Through collaboration between the government and the private sector, the economics and stability of renewable energy sources can be met.”
─Recently, investment in data centers has become popular. Some are concerned about over-supply. What is your perspective on this?
“Data centers are still a globally popular asset for infrastructure investment. However, the market dynamics have changed. Investing in data centers should not be done indiscriminately; it is important to first look at whether the power grid can support large businesses that will utilize the centers.
Data centers use a large amount of energy, so it is crucial to ensure they are connected to power sources that can accommodate this demand. In data center business models, electricity costs account for 15-20% of the total expenses. Recently, the biggest reason for delays in some data center construction plans is not due to a lack of demand, but rather the slow development of the power grid and generation facilities. It is essential to ensure that power can be secured as planned when investing in data centers.”
─What should be noted when investing in infrastructure assets?
“There are mainly two key points. First, you should keep a long-term perspective in mind. In this process, it is important to identify themes that can enhance asset value resilience, such as decarbonization and decentralization. Additionally, it should be considered that infrastructure assets are the key industries of specific regions. Instead of focusing on one region, diversifying will help build a stable portfolio.”
─If you had to point out a particularly good region for infrastructure investment, where would it be?
“Australia is undoubtedly at the forefront. I want to emphasize that there are tremendous opportunities in Australia. In an age of great uncertainty, investing in transparent, resilient assets is crucial, and I believe Australia is such an attractive market. Australia has been investing in infrastructure for over 40 years, and Korean corporations have formed relationships by directly investing in Australian assets.”