UBS Asset Management is enhancing its infrastructure assets, focusing on energy transition and digitalization to counter the toughest market for global infrastructure deals since 2013. Amid high interest rates and market saturation, the $1.5 trillion investment division of UBS is upgrading wind operations in Texas with Phoenix Wind Repower LLC by installing advanced turbines and is modernizing communication networks in rural France and Germany through Altitude Infra and Northern Fibre Networks.
Andrew Morris, speaking from Sydney during visits with Australian clients, highlighted the firm's strategic shift towards growth-oriented investments in response to the central banks' efforts to combat inflation with high borrowing costs. The current environment has led to a decrease in deal flow, prompting UBS to prioritize enhancements over acquisitions.
The company's portfolio includes Datum Datacentres Ltd., which is expanding colocation data centers across UK cities, including Manchester, addressing the growing demand for data services. Morris expressed optimism for investment opportunities in energy transition and digitalization despite economic headwinds.
UBS Asset Management's approach reflects adaptability to a changing financial landscape, focusing on sustainable growth through strategic enhancements rather than acquisitions. Morris, who previously worked with Canada Pension Plan, noted a stark contrast from two years ago when bidding was competitive; now sellers are hesitant to reprice assets in response to interest rate hikes.
With infrastructure transaction values down nearly half since last year and expected to continue into the next year, UBS prepares for ongoing market softness. The firm's focus on mid-sized North American and European companies over larger deals now monopolized by major funds indicates a strategic pivot in their investment approach amid persistent high inflation and capital demands for energy sector upgrades.
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