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nfrastructure investing is often associated with large-scale projects like airports, utilities and transportation networks. Yet, mid-market infrastructure offers investors
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Mid-MARKET infrastructure
Is now the time to harness opportunities in mid-MARKET infrastructure?
Disclaimer Past performance is not a guarantee or a reliable indicator of future results.The Fund will be actively managed in reference to the Bloomberg Barclays MSCI Global Green Bond Index as further outlined in the Prospectus and Key Investor Information Document. Performance and fees Past performance is not a guarantee or a reliable indicator of future results. Performance figures are presented net of management fees commissions, other expenses, and the deduction of actual investment advisory fees; but do not reflect the deduction of custodial fees. The "net of fees" performance figures above also reflect the reinvestment of earnings. All periods longer than one year are annualized. Separate account clients may elect to include PIMCO sector funds in their portfolio; sector funds may be subject to additional terms and fees. Charts Performance results for certain charts and graphs may be limited by data ranges specified on those charts and graphs; different time periods may produce different results. ESG Socially responsible investing is qualitative and subjective by nature, and there is no guarantee that the criteria utilized, or judgment exercised, by PIMCO will reflect the beliefs or values of any one particular investor. Information regarding responsible practices is obtained through voluntary or third-party reporting, which may not be accurate or complete, and PIMCO is dependent on such information to evaluate a company’s commitment to, or implementation of, responsible practices. Socially responsible norms differ by region. There is no assurance that the socially responsible investing strategy and techniques employed will be successful. Past performance is not a guarantee or reliable indicator of future results. For professional use only The services and products described in this communication are only available to professional clients as defined in the Financial Conduct Authority's Handbook. This communication is not a public offer and individual investors should not rely on this document. Opinion and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness.The services and products described in this communication are only available to professional clients as defined in the MiFiD II Directive 2014/65/EU Annex II Handbook and its implementation of local rules. This communication is not a public offer and individual investors should not rely on this document. Opinion and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. PIMCO Europe Ltd (Company No. 2604517) is authorised and regulated by the Financial Conduct Authority (12 Endeavour Square, London E20 1JN) in the UK. The services provided by PIMCO Europe Ltd are not available to retail investors, who should not rely on this communication but contact their financial adviser. PIMCO Europe GmbH (Company No. 192083, Seidlstr. 24-24a, 80335 Munich, Germany), PIMCO Europe GmbH Italian Branch (Company No. 10005170963), PIMCO Europe GmbH Spanish Branch (N.I.F. W2765338E) and PIMCO Europe GmbH Irish Branch (Company No. 909462) are authorised and regulated by the German Federal Financial Supervisory Authority (BaFin) (Marie- Curie-Str. 24-28, 60439 Frankfurt am Main) in Germany in accordance with Section 15 of the German Securities Institutions Act (WpIG). The Italian Branch, Irish Branch and Spanish Branch are additionally supervised by: (1) Italian Branch: the Commissione Nazionale per le Società e la Borsa (CONSOB) in accordance with Article 27 of the Italian Consolidated Financial Act; (2) Irish Branch: the Central Bank of Ireland in accordance with Regulation 43 of the European Union (Markets in Financial Instruments) Regulations 2017, as amended; and (3) Spanish Branch: the Comisión Nacional del Mercado de Valores (CNMV) in accordance with obligations stipulated in articles 168 and 203 to 224, as well as obligations contained in Tile V, Section I of the Law on the Securities Market (LSM) and in articles 111, 114 and 117 of Royal Decree 217/2008, respectively. The services provided by PIMCO Europe GmbH are available only to professional clients as defined in Section 67 para. 2 German Securities Trading Act (WpHG). They are not available to individual investors, who should not rely on this communication.| PIMCO (Schweiz) GmbH (registered in Switzerland, Company No. CH-020.4.038.582-2) . The services provided by PIMCO (Schweiz) GmbH are not available to retail investors, who should not rely on this communication but contact their financial adviser.
“Net zero commitments are set to revolutionise the world of long-dated real assets”
An integral part of an infrastructure portfolio
Unlocking mid-market potential
Important information
In this guide, PATRIZIA discusses why the current economic environment is fertile ground to explore opportunities in mid-market assets. The firm shares why Europe is an attractive investment landscape for the market segment and why a thematic approach favours assets that have long-term structural drivers.
Infrastructure is a key private market asset class that offers clear diversification benefits and lower correlations to existing equity and bond portfolios.
The information contained herein is directed only at professional clients and intended solely for use by the recipient. No part of this document or the information herein may be distributed, copied or reproduced in any manner, in whole or in part, without our prior written consent. This document is for information and illustrative purposes only. It does not constitute advice, a recommendation or a solicitation of an offer to buy or sell shares or other interests, financial instruments or the underlying assets, nor does this document contain any commitment by PATRIZIA SE or any of its affiliates. Whilst prepared to the best of our knowledge, the information contained in this document does not purport to be comprehensive. PATRIZIA SE and its affiliates provide no warranty or guarantee in relation to the information provided herein and accept no liability for any loss or damage of any kind whatsoever relating to this material. The information herein is subject to change without notice.
distinct advantages over its counterparts.
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In mid-market assets, investors not only benefit from diversification and improved risk-adjusted returns alongside a large-cap manager in portfolios. They can also capitalise on the growth opportunities of long-term megatrends such as the energy transition and climate and demographic change.
Disclaimer to come
Connexin: Shaping sustainable cities
Tapping into megatrends with European Mid-Market Infrastructure
or BROWSe OTHER CHAPTERS
Finally, we look under the hood of a successful investment that unites the benefits of Smart Communities and Sustainable Development Goals.
Impact investing: Where are we now?
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Is now the time to harness opportunities in mid-market infrastructure?
The economic climate has aligned for infrastructure, and mid-market assets offer diversification and inflation protection across market cycles, as well as the opportunity to take advantage of growth in the energy transition, climate change, and other key megatrends
e are witnessing a period of broad based economic crises/shocks and geopolitical tensions, with global central banks attempting to perform a delicate balancing act in trying to engineer a so-called “soft landing”, by
Over the last year, investment in infrastructure has reached new heights as global policies have provided unprecedented incentives to invest in the sector. With the introduction of the Inflation Reduction Act in 2022, the United States is an ongoing hot spot for investors looking to deploy infrastructure capital – particularly in the clean energy space. Despite this, Europe's Green Deal Industrial Plan is helping to stem the flow of European investment to the US, thus securing itself as a major player in energy transition.
The biggest challenge today for asset classes like infrastructure is climbing interest rates and their subsequent impact on valuations. Yet unlike other industries, infrastructure has been somewhat shielded from the impact of high rates by its ability to pass through inflation and so investors have not seen a material fall in unlisted infrastructure valuations.
Interest rates and inflation: Not all assets are created equal
“These assets are typically long-duration assets given their long-dated cash flows, meaning that all other things being equal, an interest rate rise will have a material impact of the valuation of the asset,” says Webb.
£43.8bn
This year, buy-in and buy-out volumes could exceed the record £43.8bn seen in 2019.
Source: LCP
Yet, there are global discrepancies when it comes to deployment of capital to the asset class. Europe, for example, remains in its infancy in terms of having a meaningful allocation to infrastructure.
“On the other hand, these businesses can often absorb inflation into their cash flows and this inflation-proofing ability has really offset the potential negative effects of higher interest rates,” he explains.
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Blue bonds: long-awaited innovation or yet to make a splash?
With this backdrop, infrastructure continues to be a key private market asset class that offers investors clear diversification benefits and lower correlations to their existing equity and bond portfolios.
“Infrastructure is currently running at a correlation of about 0.1 to global equities. The reason this is so low is because it is typically a heavily contracted and regulated asset class that is largely immune to market cycles,” says Justin Webb, Head of Investment Solutions.
“European investors are typically well under 5% and in some jurisdictions, the average allocation is under 2%. While investors in Europe have been slow to allocate to infrastructure, this is rapidly changing and investors are becoming more sophisticated in understanding the asset class,” says Webb.
While there has been some progress amongst developed economies in bringing inflation down, the process is bumpy and heightened recession risk remains a key challenge for the asset class.
Yet, in infrastructure, the spectrum is wide and not only sector-specific, but asset-specific. While a sluggish economy means that Gross Domestic Product-linked assets could struggle, assets driven by megatrends like climate change, and demographics, among others, could continue to find support.
“We currently favour assets that have more long-term structural drivers and are linked to the thematic trends of decarbonisation and digitalisation. We are leaning away from assets that are linked to what is happening in the broader economy, such as ports, airports, and toll roads,” he says.
Investors that have an existing allocation to large-cap infrastructure can find clear benefits by utilising a mid-market manager in their portfolio.
Capitalising on opportunity in the mid-market
“From a purely market transaction approach entry multiples are lower in mid-market than they are on large-caps, [mid-market deals] also have lower leverage because access to debt is often limited and that means they are exposed to less credit market volatility and higher debt costs,” explains Webb.
Mid-market managers can make bilateral trades rather than participating in public auctions, which means they can negotiate directly with the sellers.
Justin Webb, Head of Investment Solutions
“We currently favour assets that have more long-term structural drivers and are linked to the thematic trends of decarbonisation and digitalisation”
Sources.
(1) Columbia Threadneedle Investments, 30 June 2023 (2) thegiin.org
“By targeting better outcomes for people in need, we seek to benefit and support them and all of society”
“We always try to engage with companies - this is not an exclusionary strategy. If a mistake has happened, what has an entity done to overcome that?”
Source: PATRIZIA client survey 2023
60% of investors plan to increase their allocation to infrastructure over the next 12 months
“[Mid-market managers] can get their hands dirty and improve operational efficiency. Smaller assets are more likely to be purchased in an unrefined condition [compared to large-cap] and in these cases, successful active management can be a driver of value creation,” he says.
“Supply and demand should give investors another reason to consider mid-market managers. Despite the current economic volatility, the pipeline for mid-market infrastructure opportunities is one of the strongest I have seen in years,” says Webb.
Mid-market managers have also been able to take greater advantage of megatrends such as digital infrastructure, energy transition, renewables and other emerging industries that offer growth.
“If you run the numbers, the evidence shows that the inclusion of a mid-market manager not only provides a higher return for the portfolio on average, but that a combination of having a large-cap and a mid-market manager provides more favourable risk-adjusted results,” he explains.
However, the manager selection process in the mid-market is vital.
“The devil is in the detail. Investors want to make sure they are getting the right manager who has a proven track record and one that they can feel confident is going to make the investments in the geographies and industries that are most varied to the large-cap manager they may currently have in their portfolio”, says Webb.
Median Enterprise Value to EBITDA Multiples by Infrastructure Industry Over Last 10 Years of Transactions
Mid-Market
Large-Cap
W
raising rates and maintaining them at these elevated levels long enough to contain inflation, without inflicting significant economic damage.
Number of Deals (Outer Donut) and Value (Inner Donut) by Deal Size in 2022 (USD)
88
$244b
$129b
608
Median Net IRR Comparison by Infrastructure Fund Strategy
Source: S&P Capital IQ, PATRIZIA. Based on S&P Capital IQ transaction data for 827 deals from December 2012 to December 2022 with information on implied EV/EBITDA multiples
Source: Preqin, PATRIZIA. Based on Preqin data for the 696 deals in 2022 that had deal size specified; mid-market defined as deals of less than US$1 billion.
Source: Preqin, PATRIZIA. Data for funds of vintage 1996 - 2022.
Charlotte Finch, client portfolio manager
n a world marked by increasing economic inequality and environmental challenges, the need for innovative investment solutions that address both financial
returns and societal impact has become ever more apparent.
Source: patrizia.ag
“From a purely market transaction approach entry multiples are lower in mid-market than they are on large-caps, [mid-cap deals] also have lower leverage because access to debt is often limited and that means they are exposed to less credit market volatility and higher debt costs,” explains Webb.
Number of Deals (Outer Donut) and Value (Inner Donut) by Deal Size Over Last 12 Months (USD)
Mid Market
Large Cap
Source: PATRIZIA
Core
Core-plus
Electric Utilities
Gas Utilities
Water Utilities
Multi Utilities
Diversified Telecom
Wireless Telecom
Renewables
Roads and Rail
Ports
Airports
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The interview: Tapping into megatrends with European mid-market infrastructure
Mid-market infrastructure offers investors the opportunity to shape our future while providing differentiated and diversified options relative to large-cap investments, says Tom Maher, Managing Director - Infrastructure
n a world marked by increasing economic inequality and environmental challenges, the need for innovative investment solutions that address both financial returns and societal impact has become ever more apparent.
Year-on-Year Growth in External Transactions
2017
2018
2019
2020
2021
2022
0.8
1.2
2.2
1.8
2.5
4.0
5.5
4.2
4.8
Standard Life external BPA volumes
Total Standard Life BPA volumes
£6bn £5bn £4bn £3bn £2bn £1bn 0
“The most important thing is the impact of the underlying projects”
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Relocating the fixed income opportunity — the case for going global
Bonds are back, although risks persist
PATRIZIA specialises in partnering with entrepreneurs and smaller corporates operating in the mid-market. We define the mid-market as businesses with an enterprise value of less than €1 billion. We look for businesses that are aligned with the four macro themes and that provide a strong platform for future value creation, situations where an injection of capital and capability by PATRIZIA has a catalytic effect on the business.
Green transport and the need for electrification of the transport network are a critical part of the energy transition. E-mobility puts us on the path to net zero, creating smarter, cleaner towns and cities.
EV charging is an opportunity which we have been watching closely for a number of years. While historically it has been difficult to balance the risk and return proposition, a combination of continued rises in EV penetration levels and evolving business models means that we are now at a tipping point where opportunities are economically attractive.
“We look for businesses that are aligned with the four macroeconomic themes that are driving the infrastructure investment of tomorrow”
“Social bonds have reached a maturity that means investors can access a wide range of opportunities, without sacrificing returns”
We are focused on investing in core plus European mid-market assets, taking controlling stakes in these businesses, and driving value through active asset management. We look for businesses that are aligned with the four macroeconomic themes that are driving the infrastructure investment of tomorrow. The largest of these themes is decarbonisation, which includes energy independence and the energy transition; the other areas are digitalisation, demographic change, and climate change.
Tell us about the PATRIZIA European Infrastructure investment strategy and the philosophy behind it?
Four key trends driving infrastructure
Every investment we make is aligned with the macro themes.
How do your focus areas in the European infrastructure investment strategy tie into your macro themes?
Europe as much as any other jurisdiction needs the infrastructure of tomorrow. The fact that this demand for investment in transition infrastructure, particularly in the energy and digital sectors, is married with high population density and stable regulatory regimes makes Europe a particularly attractive market for infrastructure investors.
What makes Europe an attractive investment landscape?
We have recently invested in Renergia, a producer of biogas and bio-LNG based in the north of Italy. This investment supports the energy transition, contributes to Europe’s energy independence, and contributes positively to the circular economy.
You take a thematic approach to investment. What are some recent investments in the European infrastructure investment strategy?
Renergia takes residential and agricultural waste from the local region and produces biogas, which is upgraded to biomethane. The biomethane is then transported through the national network for conversion into bio-LNG at Renergia's liquefaction plant, to be sold to the trucking and transport industry.
From an energy transition perspective, the trucking network is a long way away from being able to electrify and hence transition solutions are required. Bio-LNG is a perfect transition fuel because we can utilise local waste resources to create a biofuel that supports a sector that otherwise does not have a clear path to decarbonise as quickly as required.
Resilient cashflows
Fundamentally the mid-market is attractive because it provides the opportunity to achieve higher returns while improving diversification.
What is attractive about operating in mid-market infrastructure?
A key contributor to the mid-market return premium is entry pricing. We can enter on a three to five, and sometimes even 10 times earnings before interest, taxes, depreciation, and amortisation (EBITDA) multiple lower than the comparable large cap transaction. Attractive entry pricing lays the foundation for strong returns.
The second component is the potential for valuation creation through active asset management. Being hands-on in the mid-market is critical because it allows us to grow and add value. Our goal is to invest in platform businesses that are scalable, increasing reach and efficiency. EV charging is a good example: we have done a ring-fenced deal of 200 sites with Tegut. We see huge potential to do that three or four more times and create a much larger and more attractive pool of assets.
Delivering off-market investment opportunities
The mid-market has been much more robust. The deal flow that we see today reflects work and relationships that were built 6, 12 or 24-plus months ago. Around 80% of the transactions we are doing are bilateral and that takes time; often a year or more of relationship building with the CEO, founder, or chairman of the business.
Deal volumes are broadly in a lull, is this your experience in the mid-market?
The other side of that is those mid-market players have less access to capital and that the cost of capital has risen. That has hit the mid-market harder than the large-cap infrastructure. So, companies that might have contemplated debt financing, now see equity as a more attractive alternative, which makes partnerships with a player such as PATRIZIA even more attractive.
It has been very positive, and it is giving us the capacity to leverage a much bigger footprint. We see investors wanting stronger relationships with a smaller number of managers, so being able to provide deep insight capability across real assets is powerful for an investor. We do that without changing our entrepreneurial spirit, our focus on the right investment outcomes, and commitment to sustainability.
How has the acquisition of Whitehelm impacted the business?
“There can be a significant discount at entry, and this is a key part of achieving strong returns”
Thematic:
Climate change impacts water scarcity and need for circular economy
Opportunities:
Smart metering Water extraction & treatment Waste recycling & treatment Circular economy infrastructure
• • • •
•
Demographic change and urbanisation drive social infrastructure
Preschools Care homes Education facilities
• • •
Decarbonisation
Energy-from-waste and biogas District heating & cogeneration Renewables Supporting networks & storage Green transport
• • • • •
Exponential need for digital infrastructure
Fibre assets Towers Contracted data storage
Select a hexagon to view details
Exclusive engagement with entrepreneur led businesses
Leveraging existing asset base to access deal flow
Leveraging relationships to turn auctions into exclusivity
Investments executed under preferred engagement (1)
Stage
Asset class
Acquisition date
Invested amount
Committed amount
EIF II Ownership
Ramp-up
June 2022
EUR 63.6m
EUR 73.6m
80.0%
PATRIZIA controlled ownership
Biogas and bio-LNG
Asset level gearing
0.0%
Volume risk
Duration contracted revenue
Price risk
Barriers to entry
Low
Average of 6-12 years
High
80%
Breakdown of sales
40%
20%
Biowaste gate fees
Bio-LNG sales
Regulated revenues
Source: PATRIZIA. Information as at 30 September 2023 – unless specified otherwise
(1) Over the last five years. Source: Patrizia
Climate change
Decarbonisation and energy transition
Demographic change and urbanisation
Digitalization
For example, one of our most recent investments is the rollout of EV charging stations at 200 locations across Germany. It is a partnership with German organic supermarket tegut and EV charging technology provider Numbat. PATRIZIA’s exclusive arrangement will result in over €140 million being invested in the installation of 400 ultra high-speed charge points at Tegut supermarkets.
Importantly, we are not only providing EV charging at locations where people need them, but also building localised, sustainable energy communities. For instance, in Germany we are developing rooftop solar and battery storage infrastructure alongside the EV charging stations, providing sustainable energy and helping to regulate the electricity grid.
Stable regulatory regimes are a critical enabler of infrastructure investment. The combination of large-capital investment upfront with long-term cashflow expectations makes infrastructure particularly sensitive to regulatory risk. Stable, sensible, long-term minded regulatory regimes provide managers with the confidence to invest.
Mid-market infrastructure allows investors to access opportunities that are differentiated relative to the investment set available for large-cap managers. PATRIZIA’s analysis highlights that the addition of a mid-market manager to a portfolio of large-cap infrastructure managers can increase the median return per unit of risk by up to circa 30%.
Tom Maher, Managing Director - Infrastructure
Tom Maher,, Managing Director - Infrastructure
In this Q&A, Senior Director Phoebe Smith and Head of Sustainable Transformations Aaron Scott, discuss the firm’s investment in Connexin, a digital infrastructure and smart cities company bringing next-generation infrastructure to local communities. Here, they explore growth in the sector, the benefits of smart communities and how the investment meets Sustainable Development Goals
Phoebe: Connexin is a digital infrastructure company operating in the North of the UK. It offers broadband, aspiring to deliver services to 500,000 homes in the Yorkshire region. It also offers smart cities or Internet of Things (IoT) services, where it delivers smart solutions with a particular focus on smart water metering. The company now reaches 4.8 million homes on its LoRaWAN network across the UK, and Connexin has contracts for over 400,000 smart water meters with utilities like Yorkshire Water and Severn Trent Water.
What is the background on Connexin?
“Connexin is vertically integrated, so we are the internet service provider as well as the infrastructure provider. This gives us a real opportunity in the current market where a lot of the open-access offerings are struggling to attract customers”
Phoebe Smith, Senior Director
Phoebe: When we invested in September 2020, we were excited about the potential for the company’s broader range of digital infrastructure. At this stage, Connexin had been offering broadband via fixed wireless access and it already had 5,000 customers and initial smart city contracts with local authorities, one of the few in the market capable of delivering end-to-end smart solutions; this was the base that we wanted to build on.
What was the underlying investment thesis for Connexin?
In IoT, the opportunity is very significant given the market is just beginning to take off. We have worked with advisors such as Analysys Mason to look at the total size of the market and the extent of the opportunity across a variety of sectors that IoT solutions are suitable for. They forecast growth in wireless IoT connections at a 17% compound annual growth rate to 2035. The expectation is that LoRaWAN will overtake cellular connectivity for IoT over that period. By rolling out LoRaWAN networks nationally, there is access to a huge opportunity set, providing smart solutions that benefit local communities through economic and environmental efficiencies while delivering better services.
Councils only collect the bins that are full, based on sensor information, or AI can predict requirements such as bins that overflow on particular days due to events Route optimisation to minimise the kilometres covered and fuel needed on routes Cost benefits of using less fuel Reduction in CO2 emissions by about 60-70% Social benefits include minimising overflowing bins
IoT solutions for people, communities and the environment
Smart waste collection
Ability to quickly detect leaks in water infrastructure Greater understanding by customer of water use, driving decrease water usage and water waste Accurate billing information for water utility
Smart water metering
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Proactively manage energy usage Monitor HVAC, light, and air quality of the building to reduce unnecessary costs and usage while improving comfort Security and safety solutions
Smart buildings
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City energy consumption can be reduced by about 60% through the retrofit of traditional lights into LED Smart dimming capabilities can reduce consumption by a further ~20% Street lighting network allows for further solutions to be integrated from air quality sensors, smart parking, CCTV cameras, etc
Smart Streetlighting
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Phoebe: A big focus of the business right now is delivering the fibre network and ensuring that we can continue to scale. Connexin is vertically integrated, so we are the internet service provider (ISP) as well as the infrastructure provider. This gives us a real opportunity in the current market where a lot of the open-access offerings are struggling to attract customers because there is no direct incentive to the ISPs to sell on one network over another. Connexin benefits from a strong local ISP brand, and exceptional customer service which is driving customer numbers.
How are you expecting to create value for the asset?
Aaron: PATRIZIA has around €58bn of assets under management in the real estate and infrastructure sectors and with that experience we can cross-fertilise to trigger new lines of growth for Connexin.
For example, we have in-house real estate expertise in assets that we can use to generate case studies and new product lines. In terms of decarbonisation, the built environment is one of the biggest areas we can tackle, and we think we can make a big difference with Connexin through those synergies.
Aaron: Sustainable Development Goal 8 promotes inclusive and sustainable economic growth and employment. Connexin has done a great job because of the number of jobs they have created in the Hull region.
How DOEs Connexin contribute to sustainable development goals?
When working with buildings, it can be as simple as ensuring transparency on the performance of the heating, ventilation, and air conditioning of the building. Connexin can deploy sensors into the building, so they know what the light and air quality is, how noisy the building is, and the light and heat usage. All those things influence the user experience and the energy consumption.
Phoebe: We are pleased with investment performance to date and with the exciting opportunity Connexin is primed to take advantage of. It is an investment that has occurred at the earlier stages of infrastructure development and now we have the structure and the partners to deliver on that effectively.
How is your investment in Connexin performing to date?
Aaron: Our mission at PATRIZIA is about Building Communities and Sustainable Futures and Connexin plays very nicely into that.
“PATRIZIA has around €58bn of assets under management in the real estate and infrastructure sector and with that experience we can cross-fertilise to trigger new lines of growth for Connexin”
Aaron Scott, Head of Sustainable Transformation
WHAT IS LoRaWAN?
Low power, wide area network is a LoRa Technology protocol designed to wirelessly connect battery-operated things or devices to the Internet. It is ideally suited to provide connectivity for those solutions that don’t need to transmit large amounts of data, such as smart meters which only transmit for example a measurement of water usage at a set number of times per day.
Another contribution to sustainability is around water quality and savings. In typical UK water systems, usage is about 140 litres per person. Through sensor technologies, Connexin can help water utilities reduce usage by 20% by reducing water waste.
Their latest engagement is with Yorkshire Water and when they deploy the 1.6 million sensors that they are aiming for, they will be able to map and control water leakage across a massive network of very old infrastructure.
The IoT side of the business is going very well and particularly with large smart water metering contracts continuing to be awarded. Once we have a network in place, the infrastructure can be used not only to improve leakage and monitor water usage, but also to monitor wastewater and measure water quality. These networks can then also be utilised for a variety of other IoT solutions, with both public and private parties. We can go to the local authority in the water utility's footprint and identify the smart solutions that will benefit the local community.
We are an infrastructure investor and digital infrastructure is in some ways the boring unseen part that drives more efficient buildings and more efficient local community services. These are the nuts and bolts that make a lot of the promises around decarbonisation, water optimisation, waste reduction, and a circular economy all come to life.
