Core, core-plus infra debate ‘unhelpful’

The ongoing debate around core and core-plus infrastructure is “not particularly helpful”, according to Future Fund’s James Fraser-Smith.

Speaking on a panel at Infrastructure Investor’s Global Summit taking place this week in Berlin, the Australian sovereign wealth fund director criticised the ongoing debate, preferring to describe the less traditional assets as “opportunistic” investments which now make up about 25 percent of the fund’s allocation.

Fraser-Smith was joined in consensus by other members of the panel, which included Infracapital co-founder and director Ed Clarke, SL Capital managing director of infrastructure Dominic Helmsley, Hamish Mackenzie of Deutsche Asset Management and Andrew Marino, co-head of Carlyle’s $2.5 billion Global Infrastructure Opportunity Fund.

“The excitement in the market is differentiation,” Clarke stated. “Core and non-core are not at the heart of where we should be going [in this debate].”

Mackenzie said both sides of the market will become more informed as the debate continues. He attributed efforts to segment the market along core/core-plus lines to a need to label things originating from a risk-versus-return perspective.

“Definitions will continue to blur, driven by technology change and the supply of capital,” Fraser-Smith predicted. “Good managers and good direct investors are needed to find those opportunities.”

Other topics discussed included the management of assets and future pipelines. Helmsley said generating returns are not the firm’s main priority when managing assets. He pointed to the company’s investment in Auris Kaasunjakelu, a gas distribution business with 570km of pipelines in Finland, stressing the need to “take responsibility of ownership” of such an asset and not “neglect the fundamental responsibility”, after which returns will follow.

Marino noted a peak of interest in US utilities, although he warned of the vastly
different investment environments across various states.