Pinsent Masons: Projects backed by tech firms more likely to get funding
According to a Pinsent Masons report, investors are more likely to back a bid if the technology provider is a member of the consortium instead of a sub-contractor
A project has a higher chance of receiving support from investors if it has a technology company holding an equity stake.
This was among the findings of a study carried out by law firm Pinsent Masons, published in a report titled ‘The Evolution of Infratech’.
According to the report, 87% of investors globally are more likely to back a bid if the technology provider is a member of the consortium instead of a sub-contractor.
Meanwhile, 43% of technology respondents anticipated entering a joint venture with an infrastructure company over the next three years, reflecting a 100% increase compared to their engagement over the past three years.
The report also noted that more than half of the study’s infrastructure respondents are expecting to partner with tech firms.
Infrastructure expert and partner at Pinsent Masons, Nick Ogden, commented: "For investors, having technology providers play a leadership role means there are real incentives motivating them to provide the best technology and speed up delivery.
“Our survey shows that 92% of infrastructure investors will often or always consider technology when making investment decisions over the next three years. This shows that investors are willing to spend the money which will drive this growing trend. Collaboration is already here, and is only going to increase.”
While these findings show an increasing convergence of infrastructure and technology, the report pointed out that there are a number of obstacles that must be addressed.
Overcoming cultural differences was cited by respondents as the main challenge to infratech projects, with 37% identifying the siloed approach to both sectors as a major barrier.
"Infrastructure needs to learn from tech firms and start changing from the inside-out by bringing technology into all aspects of their operation. Both sectors will need to bring together their commercial objectives, whilst understanding each other's varied risk appetites, commercial drivers and business models," said Ogden.
The second biggest challenge named by respondents was agreeing data requirements and standards, while regulatory constraints ranked in third place.
According to Pinsent Masons, 91% of respondents said they prefer an open access model with ownership of any data captured by infratech. However, the same respondents reported that data captured by infratech is available to all in just 62% of the projects they work on.
Dubai-based infrastructure Partner at Pinsent Masons, Bill Smith, said: "Clear leadership is needed from governments to ensure that data and information security regulations are fit for purpose in order for the benefits of infratech to be fully maximised.
“Despite the rapid pace of technological change and digital disruption, the UAE is a prime example of how beneficial infratech can be when clear guidelines are put into place.”
He continued: “The clear vision of both HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, and the Dubai Government is to firmly cement Dubai's place as a world-leading smart city.
“Under their stewardship, we have seen Dubai take a leading role in embracing infratech for the benefit of its residents: for example, by the establishment of Smart Dubai Government, whose express mission is to 'deliver world-class smart services and infrastructure to create happiness'. This statement encapsulates the very essence of infratech, and what it is intended to deliver into the future."
The report further revealed that monetising data from infrastructure comes fairly low on the list of ways infratech is seen as adding value, mentioned by only 21% of all respondents. Despite this, Pinsent Masons said that data will have significant potential as a revenue generator, and its value must not be overlooked.
"Data monetisation will become a more significant feature for those involved in infratech, particularly once the opportunities and risks are better understood by the infratech ecosystem, and robust data sharing arrangements and data standards are in place to support emerging business models," said Simon Colvin, technology partner at Pinsent Masons.
"Across our global markets, we are seeing interesting PPP models emerge that incorporate data monetisation as part of the financial base case, so the success of the project will depend on revenue streams from data generated by project assets. This underlines the views of the investors that there are new revenue streams and value to be driven out from this digital and data transformation."