Hindsight is a blessing, so when we started trawling through a decade of Infrastructure Investor coverage (that’s right, we celebrate our 10th birthday this year), we set ourselves a task: to identify stories for each year of publication that were not only impactful at the time we ran them, but which foreshadowed trends to come – many of which are now playing out.
So how good were we at predicting the future? Not too bad, if you’ll forgive us the immodesty (and the hindsight).
Ahead of the September publication of our special Decade anniversary supplement, here’s a sneak peak of five of the top stories over the past decade that will be featured.
Parking pains – In our July/August 2009 issue, we wrote about how the Morgan Stanley-led $1.15 billion lease of Chicago’s 36,000 on-street parking meters had “provoked anger, vandalism and legislation”. A decade later, the deal is still a fountain of discontent for every stakeholder that is not the winning consortium (read more about it here and here). With sustainable investment a hot topic today, Chicago Parking Meters stands out as a cautionary tale.
There’s a price to be paid – In November 2011, we wrote that public opposition to privately financed infrastructure did not “tend to cause investors many sleepless nights”. Except if you were Allianz Capital Partners’ former chief executive, Thomas Putter, who was already seeing the writing on the wall: “[Infrastructure investors] are now part of a mechanism that will force these assets to be paid for. We’d better be very careful about how we explain this.” The fuse having been lit, the “social dynamite” he referred to eight years ago is, in some places, appearing ready to blow. Just look at the Labour Party’s nationalisation agenda in the UK.
The renewables headache – “A victim of its remarkable success,” is how we termed Europe’s renewables sector in our September 2013 issue. We were reflecting on a “never-ending string of retroactive measures” set off by the then Spanish government to turn back the clock on its generous feed-in-tariff framework (and ballooning electricity tariff deficit). Sadly, Spain’s measures inspired a slew of European governments to follow suit. They also set the stage (alongside rapidly plunging costs) for the shift towards a subsidy-free market we are living through today.
The emergence of mid-market muscle – Four years ago, we examined our H1 2015 fundraising figures to find the “emergence of the mid-market”, as it was headlined in our August 2015 issue. We noted that “infrastructure has not yet developed a large and thriving group of mid-market managers in the way that other asset classes such as private equity have”. Well, things have certainly changed since then. The problem now, in fact, is that the mid-market appears to be getting somewhat muddied, with many sector funds doing ever-larger deals as their own sizes balloon. Another example of style drift as the asset class attracts record amounts of capital?
GIP closes Fund III on $15.8bn – “Global Infrastructure Partners has closed its third unlisted global infrastructure fund on $15.8 billion, beating Brookfield Infrastructure Fund III’s $14 billion 2016 close to become the asset class’s biggest unlisted infrastructure fund,” we wrote in our March 2017 issue. We’ll see if history repeats itself later this year, when both firms are due to close their fourth flagship funds (each looking for around $20 billion). What GIP III did (aided by Brookfield III a few months before) was announce that infrastructure mega-funds had well and truly arrived. It also highlighted a couple of ongoing trends: growing manager consolidation; and investors’ increasing appetite for the asset class. Case in point: in 2017, average fund size stood at $870 million; in the first half of this year, it climbed to $1.88 billion – a more than two-fold increase.
Here’s to the next 10 years.