In our last Market Review, published in December 2023, we predicted that transaction activity would gather pace in 2024 and that the opportunity set would make this a special vintage year. Indeed, we are now seeing a full deal pipeline and some valuation relief in sectors that previously had been too expensive to meet our risk-return expectations.
Given the modest-growth, high-inflation environment, however, we temper our optimism with a healthy dose of caution. We have always sought to structure our investments so that they do not depend on either economic growth or the potential receipt of tax credits and subsidies, and we believe that this approach may serve us well in the coming years. In addition, with uncertainty still the default setting of the global economy, our focus on value creation remains critical to driving growth and optimizing efficiency at our businesses.
Looking through a longer lens, we have been encouraged to see that the investor community’s interest in infrastructure continues to grow, especially given the strong performance of the asset class in volatile and high-inflation environments. Amid this heightened interest, we have seen industry consolidation among infrastructure investment firms and expect to see more asset managers look to enter the infrastructure space. Through these changes, we have maintained an even keel, focusing on delivering attractive risk-adjusted returns with a stable team and maintaining our emphasis on capital preservation.