Lipschultz: 'We define infra by risk'

Kohlberg Kravis Roberts global head of energy and infrastructure Marc Lipschultz (pictured) might be bullish on renewable energy, but his firm is choosy about its definition of infrastructure.

Marc Lipschultz is widely considered an experienced renewable power infrastructure investor, and he is adamant: the space is rife with promise.

The increasing level of investor attention, not to mention the increasing amount of investor capital descending upon energy infrastructure is rightly deserved, Lipschultz told Infrastructure Investor in an exclusive interview.

But so is a certain healthy degree of leeriness.

“There is a rush to participate in a revolution,” Kohlberg Kravis Roberts (KKR) global head of energy and infrastructure Lipschultz explained, “and investor interest is exceeding incumbent knowledge. If people think there is a much lower risk in investing in energy through energy infrastructure – then people are wrong”.

A pipeline, or master limited partnership (MLP), is a prime example, said Lipschultz.

“A pipeline fully contracted over a decade to more than a single counterparty has a certain, low-risk profile,” Lipschultz explained. “A pipeline with a particular user has a different risk profile”.

To KKR, risk profile – not sector, or commonly used nomenclature – is the determining factor in what is infrastructure and, consequently, a justifiably attractive infrastructure asset.

“We define it by risk,” he said. “Take a port, a category often included as infrastructure. We are sceptical about investing in an asset like a port. It is a deeply cyclical business”.

*To find out more about the criteria used by KKR to vet a desirable infrastructure asset, click here to read our exclusive interview with Marc Lipschultz, published in the September 2012 issue of Infrastructure Investor magazine.