What challenges does infrastructure face as an asset class?

In this interview Darryl Murphy, Head of Infrastructure Debt at Aviva Investors, discusses the challenges that infrastructure faces as an asset class and how to improve infrastructure delivery.

11 August 2017

An interview with Darryl Murphy, Head of Infrastructure Debt at Aviva Investors. This is part of a series of interviews gathering perspectives on infrastructure from industry leaders and key decision makers. Watch the full interview (or read the transcript) below.

What challenges does infrastructure face as an asset class?

Infrastructure faces a great challenge of funding; it's not financing, it's actually who's going to pay for it. And the answer is you and I – as a consumer or as a taxpayer – and until we really grasp that and find new sources of funding, our general ambition to invest in infrastructure won't be met.

I think the UK has a lot of detractors in terms of its infrastructure delivery. In reality, it's actually quite good. If we look back, we've delivered over 700 projects using PPP... many of which don't really get the recognition that they deserve, and that today as we look out, we can see mega infrastructure projects which are being delivered on time and on budget.

We need to find new ways of funding infrastructure, particularly using assets that maybe the public sector already has, such as the value of land that increases, particularly when transport projects are invested... an example being such as cross rail or future cross rail 2.

So overall we need to find these new ways of delivering more value from what we've got.

If you had £1 billion to invest in infrastructure, what would you invest in?

If I had a billion pounds I'd probably select a project that I'd like to invest in and really that would be swansea tidal lagoon. That's a very interesting project: obviously it's very low carbon and it's the forefront of a technology that could be used across the UK.

What can the public sector do more of to help deliver UK infrastructure?

I think the public sector can do more to help deliver infrastructure more quickly, particularly about how it prepares projects. We need to do more upfront in order of thinking through funding models and procurement models so then they can go to market and get to actual delivery in a shorter period of time.

What makes infrastructure a good asset for investment?

Infrastructure is an ideal asset for investment, particularly for pension funds and institutional investors. It provides long term stable cash flows, often which are index linked and also it provides a relatively low level of risk for a reasonable level return.

I think PPP PFI has to really come back in terms of project delivery in the UK. We've had a number of years accessible delivery and then politically it became unacceptable. There are signs now that government is willing to embrace this on perhaps a more pragmatic basis and that can only be a good thing.

Where are the biggest bottlenecks for infrastructure delivery?

The largest bottleneck to the infrastructure industry... it's very much around certainty of projects and programs. We've gone a number of years with lots of plans but lack actual, granular detail in terms of what's going to be delivered and therefore the industry is struggling a little bit to invest into the future.

Central government has become very focused on important large-scale mega projects. A lot of our day-to-day infrastructure has to be delivered locally in cities or in regions. Devolution potentially offers a route to provide funding, therefore those projects can come to life. What I'd like to see is local authorities developing local infrastructure plans such as we have in London to enable a forward-looking investment program.


For more perspectives on infrastructure, read our industry report featuring 13 in-depth interviews with industry leaders and key decision makers in the infrastructure sector.

What challenges does infrastructure face as an asset class?

Infrastructure faces a great challenge of funding; it's not financing, it's actually who's going to pay for it. And the answer is you and I – as a consumer or as a taxpayer...
Darryl Murphy, Head of Infrastructure Debt, Aviva Investors

Perspectives on infrastructure

Perspectives on infrastructure

How can we improve the delivery of UK infrastructure? Views from industry leaders and key decision makers, along with survey results from 1,651 members of the general public.
Read report