How is the 'infrastructure' asset class defined?

Answer

There are several ways to define what constitutes or is considered 'infrastructure'. The OECD proposes a broad definition encompassing the 'system of public works in a country, state or region, including roads, utility lines and public buildings'. However, this can be hard to implement.

Our TICCS® classification system improves upon this by suggesting a number of fundamental economic criteria have to be present for a company and its assets to be meaningfully designated as infrastructure:

• Single-use investments

• Sunk or irreversible capital investment

• Large size requiring a long repayment period

• Inflexible total cost structure

• Infrastructure as a service

• Not a store of value

Assets and companies that can be categorised under TICCS® are expected to meet these fundamental criteria. All of them stem from the long-term and durable nature of infrastructure assets and the companies that hold them and the commitment of their owners to only recoup the value of their investment over a long time period.