Energy security in focus in global listed infrastructure
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Energy security, the reliable and affordable supply of energy, has vaulted to the top of the geopolitical agenda. With the invasion of Ukraine in 2022 bringing the issue to prominence, the current Middle East conflict has forced governments all over the world to once again rethink their energy dependencies.
What does this mean for investors in global listed infrastructure? In the short-term, we believe the impact is little to none, as highly contracted or regulated cashflows supporting critical assets to society are expected to continue to provide predictable earnings. Whilst demand is effectively inelastic, as the Ukraine war and Liberation Day tariffs demonstrated, it is almost impossible to reconfigure supply chains of commodities and power generation in the near-term. Moreover, for most global listed infrastructure assets any energy-related effects on commodity pricing or inflation are ultimately passed through to end users.
In the medium to long term, we believe there is potential for more upside in existing infrastructure assets as countries reinforce on-shore or near-shore energy supply and diversify their energy sources. Policies from this are likely to directly drive additional capex. Incumbent assets often are the most economical way to execute this. This could lead to upside value particularly in renewables, electric utilities and oil & gas storage & pipeline assets (midstream). In aggregate, these sectors make up 56% of the global listed infrastructure benchmark.1
The infrastructure nexus: Why energy security matters for asset values
Listed infrastructure spanning electricity grids, oil and gas pipelines, renewable generation, LNG terminals sit at the physical intersection of energy production and consumption. When governments act to secure energy supply, they do so through the very assets these companies own. We see three potential tailwinds as governments refocus on energy security:
Investment Implications
A number of themes merit further attention:
- Regulated electric utilities are at an important juncture because governments need grids built faster than the private sector would otherwise commit to, creating a rare alignment between regulatory generosity and political will.
- We believe North American gas midstream assets offer an underappreciated cashflow hedge: volumes are largely locked in, returns are attractive, and the energy security narrative has extended the runway materially.
- Already notable in UK and Europe, the shift toward energy independence is accelerating domestic renewable procurement mandates globally, directly benefiting owners of long-duration contracted wind and solar assets.
The following chart highlights that global listed infrastructure has favourable exposure to these themes given the weighting to utilities in the sector.
Source: GLIO, Preqin, FTSE as at 30 September 2025.
Portfolio is Resolution Capital Global Listed Infrastructure strategy.
Private infrastructure as represented by deal sizes from 2020 to 30 September 2025. Midstream only for listed.
** Private includes data centres while listed does not.
In summary, energy security is structurally positive for listed infrastructure cashflows and asset values. In particular, we believe this accelerates and extends the strong outlook for regulated utilities. Our current base case for regulated utilities without upside from energy security is for double digit total returns in this super core infrastructure sub-sector in aggregate.
Within regulated utilities, we have tilted the portfolio towards best ideas where we expect returns (five-year internal rates of return) in the teens. As illustrated in the chart above, listed infrastructure presents a much larger opportunity set for incumbent utilities versus private infrastructure. Regulated utilities represent a strong risk-reward proposition and offers further upside optionality from any increase in dedication to energy security.
Overall, we continue to monitor the fluid situation and have sought to balance the portfolio for the range of likely outcomes. If disruptions to the supply of Middle Eastern fossil fuels continue for an extended period, European and Asian buyers are likely to seek further diversification of their sources. In which case, we believe North American midstream assets facilitating these volumes should see more growth or have an extension in the life of their cashflow profiles. This is not currently priced fully into share prices and we would likely increase our investment in this sector in this scenario.
Footnotes
1As represented by the FTSE Developed Core 50/50 Infrastructure Index
2 Source: International Energy Agency
Disclaimer:
This communication is prepared by Resolution Capital Limited (‘Resolution Capital’) (ABN 50 108 584 167, AFSL 274491) as the investment manager of the Resolution Capital Global Listed Infrastructure Fund (ARSN 653 043 442) (the ‘Fund’) and is intended for sophisticated investors only. Pinnacle Fund Services Limited (‘PFSL’) (ABN 29 082 494 362, AFSL 238371) is the product issuer of the Fund and is a wholly owned subsidiary of Pinnacle Investment Management Group Limited (‘Pinnacle’) (ABN 22 100 325 184).
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