WEBVTT 1 00:00:04.080 --> 00:00:07.639 With Laurent's segle and from London and Gerard read from Berlin. 2 00:00:08.119 --> 00:00:10.039 This is redefining. 3 00:00:09.519 --> 00:00:14.359 Energy Today on Really Think Energy Child, we're going to 4 00:00:14.480 --> 00:00:19.039 talk about infrastructure funds and their role in financing honorables 5 00:00:19.079 --> 00:00:19.800 and data center. 6 00:00:20.480 --> 00:00:23.800 Absolutely, it's a very very important topic because I think 7 00:00:23.839 --> 00:00:26.640 we both agree, Lauran, there's quite a lot of changes 8 00:00:26.679 --> 00:00:30.519 going on in the renewable space, some good, some bad, 9 00:00:30.839 --> 00:00:33.719 some exciting, some not, and we need to really dig 10 00:00:33.719 --> 00:00:34.439 into this topic. 11 00:00:34.880 --> 00:00:37.039 But first of all, from our partner, A. 12 00:00:37.079 --> 00:00:40.880 Bloco Energy is Europe's premier leaser of ten foot container 13 00:00:40.920 --> 00:00:45.359 mobile batteries built in Europe with COTL best LFP cells. 14 00:00:45.920 --> 00:00:51.240 A Bloco Energy serves fourteen European countries, including France, Germany 15 00:00:51.320 --> 00:00:54.520 and the UK. A Bloco's batteries can be leased for 16 00:00:54.560 --> 00:00:57.759 any duration between six weeks and six years and they 17 00:00:57.799 --> 00:01:01.600 are monitored by the Dutch award winning platform school a 18 00:01:01.719 --> 00:01:05.040 block O Energy. Make your life easier, make your business 19 00:01:05.040 --> 00:01:05.719 more flexible. 20 00:01:06.000 --> 00:01:09.879 Back to the show, Yes Jr. The infrastructure fun industry, 21 00:01:10.519 --> 00:01:15.239 we have a technical term called AUM asset under management 22 00:01:15.959 --> 00:01:20.879 and that sector as quadruple over the past decade. So 23 00:01:21.159 --> 00:01:24.480 we need to ask ourselves, who are the players, how 24 00:01:24.519 --> 00:01:27.680 does it work, what are the trends? And for that 25 00:01:27.719 --> 00:01:30.280 we've brought an expert in the matter. 26 00:01:30.719 --> 00:01:33.799 Yeah. Again, it is someone that really keeps on top 27 00:01:33.799 --> 00:01:37.040 of the numbers, because it's all about numbers, as you said, 28 00:01:37.079 --> 00:01:41.319 assets under management, and actually the trend towards bigger is better, 29 00:01:41.480 --> 00:01:42.480 as I might say. 30 00:01:42.680 --> 00:01:46.120 We'll see about that. So I guess today is Zach 31 00:01:46.200 --> 00:01:51.640 Bentley is American editors for Infrastructure Investor, which is part 32 00:01:51.680 --> 00:01:55.680 of the PEI Group. The PI Group is a subscriber 33 00:01:55.760 --> 00:01:59.640 focused business intelligence company producing a lot of that, as 34 00:01:59.640 --> 00:02:03.439 you said, around infrastructure or private equity, real estate, and 35 00:02:03.719 --> 00:02:08.639 inform strategy and decision making of course alternative asset classes. 36 00:02:08.719 --> 00:02:11.000 So let's bring him on the show. Zach. 37 00:02:11.199 --> 00:02:14.280 Welcome to the show. Thank you, lan Well. Zach. 38 00:02:14.319 --> 00:02:16.319 Let's really got straight into this, I think, and I 39 00:02:16.319 --> 00:02:18.039 think it would be very healthful just to help people 40 00:02:18.080 --> 00:02:21.560 understand a little bit about what investing in the infrastructure is, 41 00:02:22.000 --> 00:02:24.479 what do we mean that, and why it's different than 42 00:02:24.479 --> 00:02:26.599 private equity all that type of stuff. 43 00:02:27.199 --> 00:02:31.000 The concept of infrastructure investing is you're investing in long 44 00:02:31.120 --> 00:02:34.319 term essential assets and it's the long term bit where 45 00:02:34.360 --> 00:02:38.240 it probably differs to private equity, where an ownership holders 46 00:02:38.360 --> 00:02:43.800 maybe three five years or so, whereas infrastructure is usually eight, ten, 47 00:02:43.960 --> 00:02:47.319 twelve or even a perpetual hold by a fund. That's 48 00:02:47.360 --> 00:02:50.199 a big difference. It's also meant to be a lower risk, 49 00:02:50.439 --> 00:02:54.000 lower returning form of investment. So depending on where you 50 00:02:54.039 --> 00:02:57.080 are in the what we call core core plus value 51 00:02:57.080 --> 00:03:00.800 add spectrum, you're looking at somewhere between eight of fourteen 52 00:03:00.800 --> 00:03:05.120 percent returns when I say investing in the essential assets. Previously, 53 00:03:05.159 --> 00:03:09.479 in the past that's looked quite traditional, whether that's roads, airport, 54 00:03:09.680 --> 00:03:13.439 water the like. Sometimes we see a few more quirky 55 00:03:13.439 --> 00:03:17.159 assets turn up acquired by funds. In twenty twenty five, 56 00:03:17.240 --> 00:03:21.719 we had chicken farming, we had firefighting, helicopters, we had 57 00:03:21.800 --> 00:03:24.960 the old favorite of laundry turn up. Again, it's not 58 00:03:25.000 --> 00:03:28.000 always what you might think infrastructures. 59 00:03:27.719 --> 00:03:30.039 But the key thing was what the investor is looking 60 00:03:30.039 --> 00:03:33.639 for is long term returns, right yeah, And so anyone 61 00:03:33.680 --> 00:03:37.520 who's building infrastructure where maybe the payback periods are long 62 00:03:37.560 --> 00:03:39.840 on us, that's the type of thing that these investors 63 00:03:39.879 --> 00:03:41.080 are putting money into. 64 00:03:41.000 --> 00:03:45.680 Right yes, And the yield based component of these assets 65 00:03:45.759 --> 00:03:48.039 is much more important in infrastructure than it is in 66 00:03:48.080 --> 00:03:48.759 private equity. 67 00:03:48.919 --> 00:03:52.879 For example, the type of assets they are investing in, 68 00:03:53.199 --> 00:03:55.840 would you say they are operational, they are about to 69 00:03:55.879 --> 00:04:00.800 be operational? How much risk has those infrastructure willing to take. 70 00:04:01.599 --> 00:04:04.639 I think if you're more at that eight percent circle 71 00:04:05.120 --> 00:04:08.280 range of return, you're looking at something that's more operational, 72 00:04:08.479 --> 00:04:12.560 whether that's operational energy assets or operational pipelines and things 73 00:04:12.599 --> 00:04:16.519 like that. If you're going for the higher returns, you're 74 00:04:16.519 --> 00:04:19.319 doing a lot more green field development, So a lot 75 00:04:19.360 --> 00:04:23.399 of capital expenditure going into renewables and data centers and 76 00:04:23.519 --> 00:04:27.319 fiberpore band for example. In the type of investment which 77 00:04:27.399 --> 00:04:30.639 are being made now. So we're at the middle of 78 00:04:30.680 --> 00:04:34.040 the decade, and let's compare with like five or ten 79 00:04:34.120 --> 00:04:39.759 years ago, what are the main categories clean energy infrastructure 80 00:04:39.959 --> 00:04:44.079 like ports, airports, tunnels, you know, or whatever, and of 81 00:04:44.120 --> 00:04:46.839 course data centers arriving. So how do you see the 82 00:04:46.959 --> 00:04:49.319 landscape of the type of investment being made. 83 00:04:50.120 --> 00:04:53.720 The last few years has just seen a real ramp 84 00:04:53.800 --> 00:04:57.360 up of firstly renewables development. It's been a part of 85 00:04:57.399 --> 00:05:00.199 the market for quite a long time. People now own 86 00:05:00.399 --> 00:05:03.720 very large development platforms and there's a constant build out 87 00:05:03.759 --> 00:05:07.199 of those, we have the data center market, which in 88 00:05:07.199 --> 00:05:11.240 the last few years has exploded. And it's important to note, 89 00:05:11.399 --> 00:05:13.920 and maybe we've been ten minutes onto a podcast and 90 00:05:14.319 --> 00:05:18.079 haven't used the word AI yet, but it's important to 91 00:05:18.120 --> 00:05:20.839 know that the data centers were booming before AI, but 92 00:05:21.040 --> 00:05:24.879 the AI tail winds have just sent this into into 93 00:05:24.879 --> 00:05:27.199 a way that we've kind of never seen this market before. 94 00:05:28.000 --> 00:05:29.800 You know, we used to have a sector with an 95 00:05:29.839 --> 00:05:33.160 infrastructure and we called it telecoms, and that just used 96 00:05:33.160 --> 00:05:36.519 to be towers, but sort of the digital infstructure space 97 00:05:36.600 --> 00:05:40.480 has broadened so much more with data centers and fiberpore band. Obviously, 98 00:05:40.560 --> 00:05:44.079 during COVID, we saw a big fall in the interesting 99 00:05:44.399 --> 00:05:47.879 airport assets, for example, or toll roads where people were 100 00:05:47.959 --> 00:05:51.279 getting revenue based on the toll being paid. Airports are 101 00:05:51.360 --> 00:05:54.160 much more in fashion now than five years ago. There's 102 00:05:54.199 --> 00:05:57.800 been quite a lot of expenditure into those by infrastructure 103 00:05:57.839 --> 00:06:00.720 funds in the last couple of years. I think sort 104 00:06:00.759 --> 00:06:03.800 of people have understood the risk that is now involved 105 00:06:03.800 --> 00:06:07.279 in that, and we used to see a lot more 106 00:06:07.360 --> 00:06:10.759 activity in what was called social infrastructure. That's a much 107 00:06:10.800 --> 00:06:12.800 smaller part of the market these days. 108 00:06:13.079 --> 00:06:15.600 Zach can I maybe ask you to sort of put 109 00:06:15.639 --> 00:06:20.399 in context really the size of infrastructure investments across the 110 00:06:20.439 --> 00:06:22.279 world and just give us an idea of whether this 111 00:06:22.399 --> 00:06:26.439 is growing, what sectors are Obviously you talked about AI, 112 00:06:26.560 --> 00:06:28.560 we can see that, but just to put it all 113 00:06:28.639 --> 00:06:31.600 into relativity so that we can really get a sense 114 00:06:31.639 --> 00:06:33.279 of what's going on in the market. 115 00:06:34.360 --> 00:06:39.360 Infrastructure investor. We recently published our fundraising statistics for twenty 116 00:06:39.399 --> 00:06:43.040 twenty five, and that told us that this was the 117 00:06:43.240 --> 00:06:46.839 biggest fundraising year ever on record, with nearly three hundred 118 00:06:46.879 --> 00:06:50.720 billion dollars raised in the year. People used to look 119 00:06:50.759 --> 00:06:53.439 back at twenty twenty one and twenty twenty two as 120 00:06:53.600 --> 00:06:57.120 the heated days of fundraising, and that was just shy 121 00:06:57.199 --> 00:07:00.160 of two hundred billion in those two years. So this 122 00:07:00.199 --> 00:07:02.600 three hundred billion is a massive vamp up. If we 123 00:07:02.639 --> 00:07:05.199 go back ten years, it was fifty billion in the years, 124 00:07:05.240 --> 00:07:08.560 So the multiples are expanding, the size of the funds 125 00:07:08.600 --> 00:07:11.399 are getting much bigger. What I would caveat that with 126 00:07:11.800 --> 00:07:15.120 is this three hundred billion is based on when the 127 00:07:15.160 --> 00:07:19.000 funds closed, and that's when we consider it raised. So 128 00:07:19.079 --> 00:07:21.759 we have actually had a couple of years of more 129 00:07:21.800 --> 00:07:24.720 fallow fund raising in the last two years. And what 130 00:07:24.759 --> 00:07:26.560 we've seen in twenty twenty five is there's a lot 131 00:07:26.600 --> 00:07:29.600 of funds that were maybe launched in twenty twenty three 132 00:07:29.680 --> 00:07:32.839 or so have got to final close slower than they 133 00:07:32.920 --> 00:07:34.120 might have done previously. 134 00:07:34.680 --> 00:07:37.800 What you're saying is the funds getting bigger, but it 135 00:07:37.839 --> 00:07:39.199 takes more time to raise them. 136 00:07:39.800 --> 00:07:43.120 Yes, the average time for fund to close these days 137 00:07:43.160 --> 00:07:45.839 is about two years, whereas previously they used to be 138 00:07:46.040 --> 00:07:46.920 a year and a half or so. 139 00:07:48.000 --> 00:07:51.120 And of course one of the conclusions you also draw 140 00:07:51.240 --> 00:07:54.959 is that the big fund manager are just getting bigger. 141 00:07:55.439 --> 00:07:59.439 There is a generic consolidation and I guess around the pipeline, 142 00:08:00.160 --> 00:08:03.600 the team, the access to data, I don't know, but 143 00:08:03.639 --> 00:08:06.000 I mean it looks like it's always the same name 144 00:08:06.079 --> 00:08:09.120 and the numbers get just bigger and bigger. Yeah. 145 00:08:09.319 --> 00:08:12.480 Within our statistics, the top ten funds that close into 146 00:08:12.560 --> 00:08:15.759 twenty twenty five accounted for nearly half of all the 147 00:08:15.800 --> 00:08:18.439 capital rays. I think that gives you a window into 148 00:08:18.439 --> 00:08:22.040 that and it's becoming increasingly condensed around those top players. 149 00:08:22.240 --> 00:08:25.920 Where many of those players and I'm thinking names that 150 00:08:26.160 --> 00:08:31.279 a lot of people might know, like Brickfield Global Infratructure Partners, KKR, Macquarie. 151 00:08:31.720 --> 00:08:34.200 They won't have just one string to their bow like 152 00:08:34.240 --> 00:08:37.879 they used to. They'll likely have two, three, four funds 153 00:08:37.879 --> 00:08:41.879 in market any given moment addressing different parts of the market, you. 154 00:08:42.000 --> 00:08:45.399 Mention some of the names, and of course another JPI 155 00:08:45.480 --> 00:08:47.960 is part of black Rock, and black Rock was already big. 156 00:08:48.039 --> 00:08:51.320 I mean here, you're really talking about an absolute behemos. 157 00:08:51.679 --> 00:08:54.399 If you take your top ten, how many are US 158 00:08:54.480 --> 00:08:57.480 based and of course is operation all around the world, 159 00:08:57.519 --> 00:08:59.879 and how much are European based? 160 00:09:00.320 --> 00:09:03.879 A majority would consider themselves US based, even though the 161 00:09:03.879 --> 00:09:09.120 funds that they've raised are usually global infrastuch funds. Maybe 162 00:09:09.279 --> 00:09:12.480 Macquarie is slightly different in that they've always raised in 163 00:09:12.559 --> 00:09:16.360 America's dedicated funds, at European dedicated fund, an Asian fund, 164 00:09:16.679 --> 00:09:20.120 But generally most of these players will be US based 165 00:09:20.200 --> 00:09:24.440 with global outlooks. In terms of the largest players, you 166 00:09:24.519 --> 00:09:28.799 do have some European head courted ones like EQT and 167 00:09:29.080 --> 00:09:33.279 Copenhagen Infrastructure Partners, but it's predominantly headquartered in the US. 168 00:09:33.879 --> 00:09:36.080 Can we move a little bit into sort of the 169 00:09:36.159 --> 00:09:38.559 area that AZEF and Lauran do a lot of work, 170 00:09:38.600 --> 00:09:41.120 which is this whole area of energy and can you 171 00:09:41.159 --> 00:09:43.360 talk a little bit just from a high level what 172 00:09:43.440 --> 00:09:45.799 you're seeing there in terms of trends. 173 00:09:46.279 --> 00:09:48.879 I'm focused on the Americas and we've had a busy 174 00:09:48.960 --> 00:09:52.399 year in renewables where a lot of the tax credits 175 00:09:52.559 --> 00:09:55.759 have been rolled back by the Trump administration, and there's 176 00:09:55.759 --> 00:09:59.399 been a lot of project cancelations. Even most recently was 177 00:09:59.559 --> 00:10:01.960 the just at the end of twenty twenty five, the 178 00:10:02.000 --> 00:10:06.679 Trump administration canceled permits for five offshore wind projects on 179 00:10:06.720 --> 00:10:10.159 the East Coast, one of which was actually delivering power 180 00:10:10.240 --> 00:10:12.879 to the grid already, another one was expecting to do 181 00:10:12.919 --> 00:10:15.559 so in a few months time. These were finance projects 182 00:10:15.960 --> 00:10:19.360 which were essentially almost ready to go and they were canceled. 183 00:10:19.399 --> 00:10:22.039 So that's been when it comes to renewables in the US, 184 00:10:22.120 --> 00:10:25.480 people over the last year have been taking stock where 185 00:10:25.480 --> 00:10:27.840 can they play in this region that's not going to 186 00:10:27.840 --> 00:10:31.440 get affected by the administration. And then in Europe you've 187 00:10:31.480 --> 00:10:35.200 had several years of large scale development. You've seen a 188 00:10:35.240 --> 00:10:38.360 lot of trouble in Europe with offshore wind too. Several 189 00:10:38.519 --> 00:10:42.600 auctions in the Netherlands and Germany. In the UK have 190 00:10:42.879 --> 00:10:45.720 not produced the results they've wanted to. It hasn't been 191 00:10:45.720 --> 00:10:49.799 considered particularly invested friendly, but you're also seeing an incredible 192 00:10:49.840 --> 00:10:53.120 amount of price volatility in Europe, especially if you look 193 00:10:53.159 --> 00:10:56.240 at a market like Spain. The blackout in Spain exposed 194 00:10:56.360 --> 00:10:59.480 what was a massive underdevelopment of battery storage, which many 195 00:10:59.519 --> 00:11:03.240 other countries have been very good at, exposed some real 196 00:11:03.399 --> 00:11:06.360 requirements that are needed if Europe is going to control 197 00:11:06.440 --> 00:11:08.159 the load of energy that's coming onto the grid. 198 00:11:09.080 --> 00:11:11.039 One of the trends, and you're going to tell me 199 00:11:11.080 --> 00:11:14.360 if you see the same thing, is decretion of platforms. 200 00:11:14.399 --> 00:11:17.759 So in fact, the infrastration funds don't invest in assets anymore, 201 00:11:17.799 --> 00:11:22.039 the great dedicated platforms, whether it's around batteries or it's 202 00:11:22.080 --> 00:11:25.159 around now what they call ipp So they don't just 203 00:11:25.360 --> 00:11:28.720 own wind farm or solar parks. They put them together 204 00:11:28.799 --> 00:11:31.600 with a management team who's going to make much more 205 00:11:31.600 --> 00:11:35.279 granular management of the energy situation. Do you see that 206 00:11:35.440 --> 00:11:37.759 platform concept being more popular. 207 00:11:38.480 --> 00:11:40.559 Yes, It's been a long time since people were just 208 00:11:40.720 --> 00:11:43.759 investing in a singular asset through an infrastructure fund. The 209 00:11:43.799 --> 00:11:47.080 platform has become the way to go, just in terms 210 00:11:47.120 --> 00:11:50.559 of scale and reppicability of what's worked. You could put 211 00:11:50.559 --> 00:11:53.559 that into multiple projects rather than just owning a single project. 212 00:11:54.159 --> 00:11:56.480 And it's not just the platforms. It will be very 213 00:11:56.519 --> 00:11:59.440 common for an infrastructure fund manager to have what they'll 214 00:11:59.480 --> 00:12:03.360 call either renewable funds or an energy transition fund. These 215 00:12:03.399 --> 00:12:07.240 funds were thirty two percent of the fundraising capital five 216 00:12:07.279 --> 00:12:10.519 years ago and that's now forty four percent in twenty 217 00:12:10.519 --> 00:12:12.799 twenty five. So it's really taking up out of the 218 00:12:12.840 --> 00:12:13.399 market there. 219 00:12:13.799 --> 00:12:17.159 And of course the big development of past three years 220 00:12:17.200 --> 00:12:20.159 is so all around that center theme, but here it's 221 00:12:20.639 --> 00:12:23.120 we are going kind of far away from what used 222 00:12:23.120 --> 00:12:25.679 to be a core product with a lot of guaranteed 223 00:12:25.720 --> 00:12:29.399 revenue from government and so on, and here it's really 224 00:12:29.519 --> 00:12:32.679 the all AI and the hope or the faith that 225 00:12:32.799 --> 00:12:37.080 the I will deliver. So how important all those data centers, 226 00:12:37.159 --> 00:12:39.399 because we've seen a few of the names you have 227 00:12:39.519 --> 00:12:42.279 mentioned before we involved into those development. 228 00:12:43.080 --> 00:12:46.519 We need to separate the data center of development both 229 00:12:46.720 --> 00:12:51.440 for there's the cloud computing requirements and there's the AI requirements. 230 00:12:51.799 --> 00:12:55.519 We all don't know where the AI is going to 231 00:12:55.600 --> 00:12:59.000 land out, whether that's in two, three, four years time. 232 00:12:59.519 --> 00:13:02.200 We do that we're going to always need these cloud 233 00:13:02.240 --> 00:13:06.399 computing requirements, and so that remains a driver for data 234 00:13:06.440 --> 00:13:10.679 center development through infrastructure funds. If you're placing all of 235 00:13:10.720 --> 00:13:13.879 your faith in AI coming off, that's maybe a bit 236 00:13:13.919 --> 00:13:16.159 of a gamble. That's you know, as you say, not 237 00:13:16.200 --> 00:13:18.120 the kind of thing that would be backed by a 238 00:13:18.159 --> 00:13:21.840 long term contract previously. We are seeing a lot of 239 00:13:22.039 --> 00:13:27.200 evolving contract developments happening the blue out case with Meta 240 00:13:27.320 --> 00:13:31.799 last year, where if Meta cancels the contract four years 241 00:13:31.840 --> 00:13:35.320 in that blue Our's debt still gets repaid. We're seeing 242 00:13:35.320 --> 00:13:38.960 some evolving structures where investors are maybe getting protected in 243 00:13:39.039 --> 00:13:41.759 case the AI story doesn't work out, or that the 244 00:13:42.559 --> 00:13:46.919 chips that are within data centers are improving. But the 245 00:13:47.039 --> 00:13:50.320 data center story without AI is still a massive story 246 00:13:50.360 --> 00:13:53.480 that's just going to be continuing, and it's completely intertwined 247 00:13:53.519 --> 00:13:57.360 with energy now, whether that's renewables or the broader conventional space. 248 00:13:57.840 --> 00:14:01.000 The first for power is driving this market in a 249 00:14:01.039 --> 00:14:02.320 way that we haven't seen it before. 250 00:14:02.960 --> 00:14:06.039 So Zach, I'm really interested in where is the new 251 00:14:06.080 --> 00:14:06.840 capital going. 252 00:14:06.919 --> 00:14:09.559 Is it all going into AI and energy, or where 253 00:14:09.639 --> 00:14:10.159 is it moving to. 254 00:14:11.080 --> 00:14:14.080 We're still at the space where most of the infrastructure 255 00:14:14.120 --> 00:14:18.919 funds being raised are global funds and global generalist funds. 256 00:14:19.360 --> 00:14:22.240 This is trying to target all forms of infrastructure and 257 00:14:22.240 --> 00:14:25.320 within a generalist fund, you're going to see quite a 258 00:14:25.320 --> 00:14:30.279 bit of renewables, energy data centers, but few managers will 259 00:14:30.279 --> 00:14:34.279 want to be over exposing themselves to single sectors. Within 260 00:14:34.399 --> 00:14:38.399 those generalist funds, what you do see is much larger 261 00:14:39.000 --> 00:14:42.720 data center dedicated funds. If they take, for example, twenty 262 00:14:42.759 --> 00:14:46.840 twenty four, our fundraising figures showed data center dedicated funds 263 00:14:46.879 --> 00:14:49.639 were just four percent of the capital, and then in 264 00:14:49.720 --> 00:14:52.120 twenty twenty five they're twenty eight percent of the capital. 265 00:14:52.399 --> 00:14:56.480 So those kind of dedicated funds are really ramping up, right, Okay, 266 00:14:57.039 --> 00:14:57.399 And of. 267 00:14:57.360 --> 00:15:00.759 Course I guess a lot of those fund manager way 268 00:15:00.759 --> 00:15:04.559 back when it sounds like it's ancient times, they were 269 00:15:04.559 --> 00:15:08.200 all net zero and everything, and now they don't have 270 00:15:08.279 --> 00:15:13.159 any problem reinvesting into fossil fuel infrastructure. So all those 271 00:15:13.399 --> 00:15:16.279 ESGY claims they been dropped are How do. 272 00:15:16.320 --> 00:15:19.600 You see that this has been a really interesting dynamic 273 00:15:19.679 --> 00:15:21.799 over I'd say the last eighteen months or so. 274 00:15:22.559 --> 00:15:23.320 Yeah, you're right. 275 00:15:23.480 --> 00:15:26.799 There was a time where we were ESG everything, and 276 00:15:27.240 --> 00:15:30.600 you had lots of both the investors themselves, so the 277 00:15:30.600 --> 00:15:33.279 pension funds and the insurance companies and the like, and 278 00:15:33.360 --> 00:15:36.559 were several fund managers not or were shying away from 279 00:15:36.879 --> 00:15:39.879 things like gas related and structure, whether gas fire power 280 00:15:39.879 --> 00:15:43.159 stations or gas pipelines. And you've seen a much more 281 00:15:43.559 --> 00:15:46.960 wider acceptance of that kind of investment from a lot 282 00:15:47.000 --> 00:15:50.679 of funds now. And the more interesting dynamic is that 283 00:15:51.039 --> 00:15:53.480 it's being wrapped up in an energy transition blanket. At 284 00:15:53.480 --> 00:15:56.159 the same time, you have a player like Blackstone, which 285 00:15:56.240 --> 00:16:00.519 has an energy transition fund and they've now got several 286 00:16:00.519 --> 00:16:05.039 gas fired power plants within that energy transition fund. We 287 00:16:05.120 --> 00:16:09.519 saw also last year a US player, Exelsia Clean Energy, 288 00:16:09.559 --> 00:16:13.240 they struck up a partnership to integrate some gas into 289 00:16:13.279 --> 00:16:17.759 their renewable portfolio. We've seen another fund run by Denam 290 00:16:17.799 --> 00:16:22.000 Capitol under the label Sustainable Infrastructure Fund, and that agreed 291 00:16:22.080 --> 00:16:25.440 a deal to convert coal plants to gas. I think 292 00:16:25.480 --> 00:16:30.480 the acceptance of gas as a sustainable form of investment 293 00:16:30.720 --> 00:16:33.600 has come leaped and bounds over the last year or two. 294 00:16:34.320 --> 00:16:38.360 Yeah, I can't wait to see the vlady Mere Sustainable Fund. 295 00:16:41.720 --> 00:16:43.440 What do you mean? I just set that up last week. 296 00:16:46.639 --> 00:16:48.960 The Russian Ukraine War did change a lot of things 297 00:16:49.039 --> 00:16:52.360 within this respect. If we're talking about this dynamic, there 298 00:16:52.360 --> 00:16:54.759 have been two main things that have really shaped The 299 00:16:54.799 --> 00:16:59.080 Russian invasion of Ukraine just reminded investors and managers that 300 00:16:59.480 --> 00:17:02.840 gas is needed in this system, at least for the 301 00:17:02.879 --> 00:17:07.119 foreseeable future. Perhaps we worse to hasty in writing it off. 302 00:17:07.359 --> 00:17:10.400 And then there's also just the massive energy demands that's 303 00:17:10.480 --> 00:17:14.319 coming from AI and data centers. That's also reminding us 304 00:17:14.400 --> 00:17:16.920 that this can't all run unrenewables. 305 00:17:17.519 --> 00:17:20.920 Because you talk about geopolitics and security, do you see 306 00:17:20.920 --> 00:17:26.079 also the infrastructure or people near some more defense assets 307 00:17:26.279 --> 00:17:27.880 or still marginal. 308 00:17:27.880 --> 00:17:31.160 That's a conversation that's happening in Europe quite a bit. 309 00:17:31.599 --> 00:17:34.200 What we see from our perspective is lots of people 310 00:17:34.319 --> 00:17:38.279 like the idea of investing in defense as a potential 311 00:17:38.359 --> 00:17:43.160 infrastructure asset. There's a real lack of defense infrastructure assets 312 00:17:43.200 --> 00:17:47.279 that would fit into someone's portfolio. There's really few investable 313 00:17:47.319 --> 00:17:50.480 opportunities that you would want from an infrastructure fund in defense. 314 00:17:51.519 --> 00:17:53.759 It's the beginning of the year, so we did our 315 00:17:53.799 --> 00:17:56.119 prediction a few weeks ago, but I like to continue 316 00:17:56.160 --> 00:18:00.599 make predictions. I can tell you that autonomous driving with 317 00:18:00.960 --> 00:18:04.960 robot taxi fleet, that's going to be a new chapter 318 00:18:05.200 --> 00:18:08.400 in infrastrctory investing. That's what I think. You hear the 319 00:18:08.480 --> 00:18:11.920 same thing around Eve's fleet and stuff like that, or 320 00:18:12.440 --> 00:18:14.000 am I just bubbling? 321 00:18:14.920 --> 00:18:18.240 Call me a traditionalist, but I don't see that entering 322 00:18:18.279 --> 00:18:22.160 into people's portfolios in the short term. We did see 323 00:18:22.279 --> 00:18:26.319 a few years ago a lot of ev charging infrastructure 324 00:18:26.319 --> 00:18:31.119 investments and performance on those was quite mixed. And then 325 00:18:31.319 --> 00:18:34.160 a lot of the uncertainty on this is driven by 326 00:18:34.799 --> 00:18:39.480 part of the pan the automobile industry, who quite wavering 327 00:18:39.599 --> 00:18:42.640 on some of their commitments to electric vehicles. If you've 328 00:18:42.640 --> 00:18:45.799 got that side of the Shane wavering, you're not going 329 00:18:45.839 --> 00:18:47.599 to find the instruction investors going into that. 330 00:18:48.279 --> 00:18:51.759 Okay job, Yeah, I suppose when I'd love to just 331 00:18:52.000 --> 00:18:55.000 talk a little bit about this sort of consolidation in 332 00:18:55.039 --> 00:18:57.359 the market and what seems to be happening. What seems 333 00:18:57.400 --> 00:18:59.240 to be happen is the big guys are getting bigger 334 00:18:59.279 --> 00:19:02.400 and they're also making acquisitions and stuff like that. Could 335 00:19:02.440 --> 00:19:05.640 you talk about why that is and how you see 336 00:19:05.680 --> 00:19:10.119 the future in terms of the specialist asset managers in 337 00:19:10.160 --> 00:19:11.680 the infrastructure area. 338 00:19:11.759 --> 00:19:14.720 It's quite announce picture. As I said before, we're seeing 339 00:19:14.839 --> 00:19:19.319 a much larger presence across the infrastructure fundraising market by 340 00:19:20.039 --> 00:19:23.119 say our largest ten to fifteen managers or so if 341 00:19:23.160 --> 00:19:26.000 I take this to renewables, we had some massive fund 342 00:19:26.000 --> 00:19:31.160 closers last year. Brookfield's Global Transition Fund raised twenty billion. 343 00:19:31.559 --> 00:19:34.880 You had Coping Infrastructure Partners that raised twelve billion euros. 344 00:19:35.519 --> 00:19:38.480 Clearly there's a lot of money being focused at the 345 00:19:38.480 --> 00:19:41.880 top there. What I would say is a lot of 346 00:19:41.880 --> 00:19:46.160 investors do also prefer more of a pivot to mid 347 00:19:46.200 --> 00:19:50.680 market investing. And you see this kind of thing manifested 348 00:19:50.839 --> 00:19:54.559 in the Tillery Energy from Finland. They just raised a 349 00:19:54.920 --> 00:19:58.799 five hundred and fifty six million European renewables fund, and 350 00:19:58.880 --> 00:20:01.519 we see plenty of kind of that more mid market 351 00:20:01.799 --> 00:20:05.079 approach to renewables at the same time. So while the 352 00:20:05.160 --> 00:20:08.559 big guns will grab the headlines, I think there's still 353 00:20:08.680 --> 00:20:10.720 plenty of activity beyond that. 354 00:20:11.319 --> 00:20:13.400 I agree because when you're a big gun and you 355 00:20:13.440 --> 00:20:16.240 have a fund of that size, you know, you don't 356 00:20:16.279 --> 00:20:20.000 even open anything if it's below say five hundred million, 357 00:20:20.400 --> 00:20:22.920 right because on the top of that, and I guess 358 00:20:23.200 --> 00:20:26.559 a lot are teaming up with like the global soffeering funds. 359 00:20:27.160 --> 00:20:29.200 So you see a lot of things happening with the 360 00:20:29.240 --> 00:20:33.359 gup from say Singapore or the girlf Those guys, they're 361 00:20:33.400 --> 00:20:36.480 not interested in fifty or one hundred million tickets, and 362 00:20:36.559 --> 00:20:39.640 there's a lot of things happening in those zones. 363 00:20:40.680 --> 00:20:43.480 Yes, And the question that people often have with bigger 364 00:20:43.480 --> 00:20:47.519 funds is what's their route to exit and is an 365 00:20:47.559 --> 00:20:51.599 asset too big? Generally, the larger funds do have a 366 00:20:51.640 --> 00:20:55.400 good track record of exit and exit multiples, but there 367 00:20:55.440 --> 00:21:00.319 is an increasing focus from investors more towards mid marketshly 368 00:21:00.400 --> 00:21:02.480 because of a worry as to who is going to 369 00:21:02.480 --> 00:21:05.359 be the eventual buyer from the larger funds in terms 370 00:21:05.359 --> 00:21:07.960 of consolidation. We are going to see quite a bit 371 00:21:08.000 --> 00:21:10.400 of that over the next couple of years, particularly in 372 00:21:10.440 --> 00:21:13.759 the US, but also in Europe as the regulatory effects 373 00:21:13.960 --> 00:21:17.319 take hold. We maybe don't need one hundred and fifty 374 00:21:17.359 --> 00:21:19.759 two hundred renewable, needy developers out there. 375 00:21:20.400 --> 00:21:23.319 Finally, on that topic there, why don't the pension funds 376 00:21:23.359 --> 00:21:24.440 just do it themselves? 377 00:21:24.799 --> 00:21:28.440 You do have pension funds who invest directly. That was 378 00:21:28.480 --> 00:21:33.119 populated twenty years ago by lee Canadian and Australian pension funds, 379 00:21:33.759 --> 00:21:36.359 but a lot of pension funds don't have the resources 380 00:21:36.400 --> 00:21:40.160 to be doing direct investments. It takes up an incredible 381 00:21:40.200 --> 00:21:45.960 amount of work in due diligence and finding opportunities, and 382 00:21:46.000 --> 00:21:50.640 they're much better set up to commit funds to infrastrutual 383 00:21:50.640 --> 00:21:53.559 fund managers and of let them do the work, and 384 00:21:53.960 --> 00:21:56.880 you do get a much bigger interest in co investment 385 00:21:57.079 --> 00:21:59.480 these days, but that's not the same as the pension 386 00:21:59.480 --> 00:22:00.759 funds doing themselves. 387 00:22:01.200 --> 00:22:05.920 Zach crystal Ball take it out twenty thirty. What's the 388 00:22:05.960 --> 00:22:07.880 world of infrastructure investing look like. 389 00:22:08.480 --> 00:22:10.920 I don't want to sound like a guy who was 390 00:22:10.960 --> 00:22:13.559 maybe in the early nineties saying that this email thing 391 00:22:13.640 --> 00:22:15.960 is never going to take off, but I am skeptical 392 00:22:16.039 --> 00:22:18.200 that the wave of investment that we have at the 393 00:22:18.200 --> 00:22:22.559 moment in AI and AI related infrastructure maybe might not 394 00:22:22.759 --> 00:22:24.960 be as fruitful as we think it might be in 395 00:22:25.000 --> 00:22:28.039 a few years time. So I think that's definitely one 396 00:22:28.079 --> 00:22:31.680 thing to be looking at. I'm very interested to see how, 397 00:22:31.960 --> 00:22:35.799 especially in the US, how renewables perform. There's a lot 398 00:22:35.799 --> 00:22:38.119 of challenges to come. We're going to see as a 399 00:22:38.160 --> 00:22:41.119 result of some of the changes that have happened in 400 00:22:41.160 --> 00:22:43.240 the last year, we're going to see a rush of 401 00:22:43.480 --> 00:22:47.039