A one-way street

Editor's Letter

Welcome to the first issue of Infrastructure Investor.

Our ambition is to be the publication of record for all those involved in the financing of, and investment in, infrastructure assets globally. You may well have
already met us via the magazine’s digital news channel, InfrastructureInvestor.com and will therefore have begun to see how we approach this multi-faceted
market. But for the record: we feel strongly that you can today talk about the new infrastructure and this magazine is dedicated to engaging with that concept fully – a concept which is as much a way of thinking as it is a particular group of people (we have included a semi-definition on page 44 by the way).

Most governments in the world now accept that they need private money to develop and maintain their infrastructure – even rich countries. Most have looked at the macro-economic issues they face and have seen a one way street: economic development requires it, ageing populations demand it and tax revenues won’t manage without it. At the same time the private sector is ready and able to apply fresh thinking as to what infrastructure gets built and how, and others are eager to tap into the long term, stable returns that infrastructure investment can deliver. We
speak to, and are read by, the people who provide that input from the private sector. And we’ll tell you where new markets will develop, as well as reviewing those already in existence.

These are therefore exciting – as well as interesting – times. An extraordinary expansion of the role of private capital in infrastructure is already underway. As well as the old project finance plays such as power plants and toll roads – which we categorise as transport and utility infrastructure – the drive is on to extend the private funding of a third category: social infrastructure.

Countries need to find new ways of funding everything from waste plants to schools, hospitals and prisons. And some, especially in Western Europe, are even extending the experiment to get private companies to provide prison guards and run medical equipment. Much of the market will still be underpinned by straightforward asset financing, but another certainty is that infrastructure finance and investment is set to evolve into something far larger and more diverse than that. Infrastructure Investor will track that evolution closely.

I’m confident the editorial team I head can deliver the news and comment you need and want. Combined, we can justifiably claim deep knowledge of alternative asset managers and investors, a practical understanding of the technical realities of infrastructure financing and investment (one of us used to work on these deals for a living) and a genuine grasp of the theory and practice of PPP activity globally.

This team is complemented by a unique roster of country, sector and technical experts who can offer meaningful insight into sometimes opaque
topics within infrastructure.

In this launch issue we focus on the rise of infrastructure funds and how they are raising capital today. We take a look at how these managers are finding new sources of cash in the middle of a financial crunch from page 24. The talk is all of tapping the vast funds trapped inside pension funds, but these long term investors might not touch the highly leveraged fare served up by infra funds so far. We talk to one of these new breed of infrastructure-savvy pension funds, Canada’s
CPPIB, to discover how they are shaping their infrastructure investment strategy. We also take a slightly subjective look at the 10 most influential institutional investors in infrastructure. We’ll take the blame for the selection (and omissions), but the results do reflect what readers told us. Elsewhere we anatomise the rise and fall of Babcock & Brown – to some the poster child of modern infrastructure investing that fell victim to the credit crunch, to others an opportunistic organisation that over-reached itself once it began to believe its own mythology.

Enjoy the issue.

Michael Kapoor