Say what you want, but if you’re a manager of closed-ended infrastructure funds, then the proof of the pudding is in the exit. On the strength of that key metric alone, Martin Lennon and Ed Clarke, co-founders of Infracapital and our p. 14 keynote interviewees for this last issue of the year, should be very pleased with themselves.
After all, their 2005-vintage infrastructure fund, which raised £908 million ($1.2 billion; €1 billion), has just been fully exited, generating a 2.1 times money multiple – a remarkable achievement, especially once you factor in that it had to prove its mettle during the turbulent years of the global financial crisis.
“Could we have actually picked a more challenging period in which to manage any kind of investment portfolio?,” Lennon asks himself during our interview. Probably not. But to adapt a line from Old Blue Eyes: If you could make it then, you’ll make it anytime. As if to underscore that point, the firm hit its £1.25 billion hard-cap for its debut greenfield strategy not long after we sat down with them in late October.
Sticking with the financial crisis for a while longer, you’ll get a fascinating recollection, starting on p. 8, from the New Mexico Educational Retirement Board’s Mark Canavan on what it was like to navigate those dark times. The scariest bit? That the 2008 recession might’ve been the last to be predictable through traditional indicators.
Infrastructure’s ability to perform well during difficult cycles has long been one of its key selling points, but that resiliency is too often dissociated from managers’ hard work. That’s one of the key themes of our annual European fund management roundtable, starting on p. 26. Facing a tricky European landscape, with restrictions on foreign investment and asset-ownership looming, managers are having “to be more creative to create the same returns”, as Antin’s Stephane Ifker elegantly put it. So far, they seem to be up to the task.
Of course, there’s a fine line between ‘just-enough’ creativity and ‘too-much’ creativity, the kind that gets investors muttering darkly about strategy drift. At a time when many an infrastructure strategy seems to be bleeding up the risk curve, that distinction becomes crucial. That’s one of the talking points in our strategies In Focus, beginning on p. 18, where we examine what, exactly, distinguishes core, core-plus, value-add and opportunistic strategies these days.
Regardless of which strategy you’ll embrace, though, you’ll want to make sure it’s future-proofed. If you want to catch a glimpse of what’s around the corner, you could do worse than our annual Future of Infrastructure special, starting on p. 32, where some of the industry’s key players share their insights into what’s around the corner.