Best of Week in Review 2021

The US infrastructure bill, moving beyond ‘vanilla’ renewables, secondaries, climate ligation and open-end funds are all on readers’ minds.

“Tell me what you’re reading, and I’ll tell you what you’re thinking.”

If that was an adage – and we’re pretty sure that it isn’t – then a look at our most popular Week in Review letters of 2021 tells us a few things. For starters, US infrastructure appears to be top of mind, following the passage of the much-vaunted bipartisan infrastructure bill. That was perhaps unsurprising, but less obvious topics like secondaries and climate litigation also weighed heavily on readers’ minds.

As the year draws to a close, we thought it was the perfect time to cast our eye on our most popular weeklies. Here, then, are readers’ top-five:

The US finally has an infra bill – here’s why it matters

A federal infrastructure bill was years in the making – and the object of much scepticism and derision (hello, Infrastructure Week). So, kudos to the Biden administration for navigating the treacherous political waters needed to make the bipartisan infrastructure bill a reality.

Even if the bill is not particularly welcoming to the private sector, we think there is much to like:

“With eight years of spending ahead of us… infrastructure is going to be at the forefront of the minds of federal and local government officials, pension administrators, financiers, you name it… It is now up to the industry to make the most of this key first step to ensure that institutional capital… plays its role as a crucial piece of the US infrastructure puzzle.”

Are ‘fed-up’ LPs ready to move beyond vanilla renewable strategies?

In the year renewables fundraising truly came of age, the headline above might seem a bit counterintuitive. But fear not: LPs are not going cold on clean energy just as we need it most; rather, they are ready “to go beyond vanilla power generation”.

This ‘readiness’ is partly (if not greatly) motivated by renewables’ increasingly shrinking return profile. Which led us to end our letter on a note of caution:

“Many LPs will view investment in energy-transition infrastructure as a natural extension of their investments in renewables. A whole new ball game it is not, but neither should it be seen as a straight swap for a lower returning renewables strategy.”

What Brookfield’s atypical debut says about infra secondaries 

Our colleagues at affiliate title Secondaries Investor offered a guest analysis of Brookfield’s debut infrastructure secondaries deal: the acquisition of 100 percent of a privately held convertible preferred security in EnLink Midstream, alongside Oaktree, in a deal worth $841 million.

The transaction stretched the boundaries of what is normally considered a secondaries transaction, with our colleagues concluding: “By imaginative use of the secondary opportunity, Brookfield appears to have found the yield opportunity without having to deal with the complications of a full acquisition.”

Could climate litigation jolt stakeholders into action? 

As the COP26 climate summit was ongoing, we decide to investigate whether the courts stood a chance of hastening the fight against climate change. As S&P noted:

“We’ve seen multiple lawsuits both from investors targeting companies but also lawsuits targeting investors who are actually funding particular types of companies. For infrastructure, that might be even more relevant.”

With infrastructure is responsible for 62 percent of all greenhouse gas emissions, we’re inclined to agree.

Blackstone is helping to rescue open-end funds from the core bracket

Hot on the heels of publishing our September Deep Dive on Blackstone‘s infrastructure programme, we put the spotlight on how the manager’s flagship infrastructure fund is helping to change the conversation around open-end vehicles. With the latter increasingly sold as core or super-core strategies, Blackstone is showing they don’t need to be boxed in like that.

“When they think about open-end funds, LPs don’t necessarily need to associate them with low-growth, low-return products. Blackstone’s entry into the asset class is a reminder there’s a more entrepreneurial market out there that is ripe for exploring with the right kind of permanent capital.”

This is the last Week in Review of the year. We’ll be back in the first week of January. In the meantime, happy holidays from the Infrastructure Investor team!