Last week a series of conferences unfolded in the City of Light under the banner of Paris InfraWeek 2017, attracting an array of institutional investors, banks, policymakers and developers to the French capital to weigh in on some of the major themes in today’s market. With our ears pressed firmly to the ground, here are a few of the key conclusions we gathered from the event.
A dry OECD pipeline
A diminishing pipeline doesn’t come as news to investors and fund managers, but it remains a pressing issue. Asked by Eugene Zhuchenko, the executive director of the Long Term Infrastructure Investors Association, about what keeps them awake at night, members responded with worries about a visible project pipeline in western Europe and a lack of forward planning evidence from policymakers. However, in a panel discussion with figures from John Hancock, UBS, Aviva, CDP and Legal & General, it was clear the participants had no immediate desire to invest in emerging markets to fill this gap. But as we noted recently following EQT’s move into Asia, perhaps that’s not such a bad idea.
The ‘two worlds of renewables’
At Natixis’s Infrastructure Day, a panel discussed the increasing risks faced by renewable energy investors as projects compete at merchant power price levels, a risk suitable for some players and worrisome for others. This scenario is what panellist Amir Sharifi, managing director of Ardian’s infrastructure division, described as “two different worlds for renewables”, predicting that offshore wind will be dominated by more industrial players, rather than the risk-averse. His views were echoed by consultant Poyry’s Richard Slark, while Saudi developer ACWA Power’s chief executive Paddy Padmanathan characterised the current renewables market as full of “chaos, opportunity and excitement”.
ESG high on the agenda
One should never allow an event to be judged purely from the size of a crowd, but it was notable that at 5pm on the Wednesday afternoon of a gruelling week, the LTIIA’s room at the OECD remained packed listening to a panel discussing the best ways to manage environmental, social and governance practices. The problem posed by Zhuchenko is that almost every LP has a slightly different ESG monitoring system. Unfortunately, that might not be an easy problem to solve. “For managers, it’s a nightmare,” he said. “Can we bring in one standard? I don’t think so.”
Telecoms dial in to the mainstream
The Natixis Infrastructure Day also heard from a range of stakeholders on the drivers of telecoms infrastructure development and investment, with the asset class’s risk perception markedly different than previously thought. “[Telecoms are] as essential as a utility in the minds of an LP,” Antin’s senior partner Stephane Ifker told onlookers. Value in the sector can be found in the Italian and Irish markets in particular, the panellists said, an opinion echoed by others on the sidelines.
Watch out, London
The message of Paris InfraWeek being partially sponsored the French Ministry for the Economy and Finance and opened by its top minister, Bruno Le Maire, was not lost, as Paris staked its claim in front of investors to replace London as Europe’s financial capital. Le Maire called Paris the “financial place of the future” in the same week the chief executive of Goldman Sachs also delivered a pointed warning to the UK. The pressure is on, then!