ARKANSAS, Nov 19 (Future Headlines)- Recent global events, from geopolitical tensions to macroeconomic challenges and climate disasters, underscore the importance of embracing the concept of global citizenship in navigating an uncertain and volatile world. As the chief executive of GIC, Singapore’s sovereign wealth fund, I emphasize that the deployment of long-term capital and the embrace of global partnerships are crucial for addressing the multifaceted challenges we face. In this context, infrastructure investments emerge as powerful tools for driving sustainable impact while generating favorable returns.
Global citizenship, in the investment context, entails deploying capital across diverse geographies and communities with a focus on long-term impact. The interconnected nature of our world means that crises in one region can have ripple effects globally. Investors, therefore, must adopt a global perspective, recognizing their role in contributing to positive change on a broader scale.
Infrastructure investments, characterized by their far-reaching impact and large-scale nature, stand out as opportunities to deploy long-term capital effectively. These investments, spanning airports, seaports, utilities, renewable energy, digital infrastructure, and more, play a foundational role in supporting modern living and fostering economic development. GIC’s portfolio reflects a decade-long commitment to infrastructure investments, recognizing their critical role in building resilient and sustainable communities.
Infrastructure investments offer tangible benefits to both communities and investors. Investments in companies like Aegea, a sanitation company in Brazil, showcase how long-term capital can contribute to community well-being. Over a decade, GIC’s investment expanded Aegea’s services, providing clean water and sewage facilities to millions and creating employment opportunities.
Infrastructure investments provide a hedge against inflation, offer stable and predictable cash flows, and exhibit resilience across macroeconomic cycles. The defensive nature of underlying assets contributes to portfolio stability. Infrastructure investments align with current mega-trends, including climate change and energy transition. Opportunities in renewable energy, digitalization, and other transformative sectors make infrastructure investments key solutions to pressing global challenges.
- Case Studies: Long-Term Capital Driving Impact
1. Aegea – Transforming Sanitation in Brazil
GIC’s investment in Aegea exemplifies the transformative power of long-term capital. Over a decade, the investment facilitated the expansion of Aegea’s sanitation network, benefiting 31 million people and creating employment opportunities. The environmental impact includes a reduction in raw sewage discharges and an 80% decrease in hospital admissions for water-borne diseases.
2. Duke Energy Indiana (DEI) – Powering the Transition to Net-Zero
GIC’s investment in DEI, a U.S. utility company, demonstrates the role of long-term capital in supporting companies on a journey to net zero. DEI, with GIC as a minority shareholder, is transitioning its power generation fleet away from coal-fired plants, contributing to cleaner energy production and aligning with environmental goals.
3. Form Energy – Innovation in Clean Energy Storage
Investing in innovation is crucial for accelerating the clean energy transition. GIC’s investment in Form Energy, a U.S. company pioneering multi-day energy storage using iron-air batteries, supports the development of long-duration energy storage solutions. This innovation is vital for addressing challenges related to renewable power intermittency and enhancing grid reliability.
4. Cellnex – Enabling Connectivity Through Telecom Towers
GIC’s investment in Cellnex, Europe’s largest independent telecom tower company, demonstrates how long-term capital can drive growth. Cellnex, with its focus on telecom infrastructure, has expanded its sites five-fold since GIC’s investment in 2018, contributing to broad and fast connectivity for consumers and businesses.
Looking ahead, the growing gap between infrastructure needs and current investment levels underscores the urgency of deploying more long-term capital. By 2023, the world is projected to invest $2.9 trillion against a $3.4 trillion need. As the global population rises and urbanization increases, infrastructure investments are projected to reach $3.8 trillion by 2040, with a soaring need of $4.6 trillion. Bridging this gap requires collaborative efforts from governments, businesses, nonprofits, and individuals.
Realizing the potential of long-term capital demands collaboration and partnerships. Governments, businesses, nonprofits, and community organizations must work together to drive positive change. The role of external fund managers, peer investors, investee companies, and service providers is crucial in creating a collective impact. GIC’s experiences since its establishment in 1981 emphasize the importance of trust and enduring partnerships.
As global citizens and change-makers, the time is ripe to say “yes” to broadening perspectives and making investments that address complex global issues. Investing in the foundations of a better tomorrow requires a commitment to deploying long-term capital wisely and leveraging the power of partnerships. Now, more than ever, the world needs a collective embrace of global citizenship to navigate challenges and shape a sustainable and resilient future.
Reporting by Emad Martin