HK Summit: Asian LPs debate whether to go direct

Panellists such as Ping An’s Dennis Chan argued direct investing is the way to go, while Sompo Japan Nipponkua Insurance’s Motoyuki Takahashi noted they need capable GPs.

The amount of exposure, capital deployed and performance objectives are key considerations when it comes to accessing and managing infrastructure assets, according to several Asia-based LPs who spoke at the Infrastructure Investor Hong Kong Summit today.

Motoyuki Takahashi, manager for infrastructure and project finance at Sompo Japan Nipponkua Insurance, stressed the need to delegate management of infrastructure assets because of the size of its holdings. Currently only two investment managers take care of its $1 billion infrastructure portfolio.

“We like commingled funds – general partners who are capable of complex deal negotiations, who are able to manage projects very well and coordinate with stakeholders, as well as generate innovative ideas to incorporate externalities as part of our return expectations,” Takahashi explained. “Delegating, however, does not always mean we are investing in a new fund, we can also resort to separately managed accounts.”

Dennis Chan, head of infrastructure at China Ping An Insurance Overseas Holdings, on the other hand, pointed out that direct investing is most beneficial to the investor. Chan added that the insurer has in the last three years partnered with blue-chip sector specialists to buy a large portion of global infrastructure assets. At an event in late August, the insurer revealed it had invested about $25 billion in infrastructure debt.

“Infrastructure investing is so large and deep right now that the asset class can easily span 20 sub-sectors. We can’t be leading all sectors and obviously infrastructure assets differ in various country jurisdictions, so we can’t be everywhere all the time,” Chan said. A 50-50 partnership arrangement with a sector specialist, he argued, is the best way to deploy large amounts of capital.

Meanwhile Jie Gong, a Hong Kong-based partner at Pantheon Ventures, highlighted that certain market strategies like infrastructure secondaries are hard to source. “It’s difficult to tap into that market unless you have offices around the world and a large transaction team to do deals that are labour intensive and time sensitive.”