Fundraising

Macquarie wins our first-ever operational awards

The Australian fund manager trumped highly commended entries by GIP, Meridiam and QIC to snatch the top spot.

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Infrastructure Investor is pleased to announce the results of its inaugural Operational Excellence Awards, a contest we launched in April as we sought out the best examples of innovative, creative and effective asset management.

Given the nature of infrastructure – assets that usually provide a vital public service – operational excellence seems one of the best criteria for determining value, whether financial or social.

We were not disappointed by the impressive number and quality of case studies we received from fund managers around the world. Neither were our five judges, who upon reviewing the submissions described them as “extremely interesting” and featuring “a very strong list of projects.”

Out of this outstanding lineup, the judges selected Macquarie Infrastructure and Real Assets (MIRA) for the innovative approach it took and accomplishments it achieved in transforming Arlanda Express, a single railway that connects Arlanda Airport – Sweden’s busiest – to central Stockholm.

MIRA acquired the asset through its €1.5 billion Macquarie European Infrastructure Fund I (MEIF I), in January 2004, at a time when Arlanda was in financial distress. MIRA realised its investment in July 2014.

There were several reasons the judges felt MIRA and Arlanda deserved to win, including the company’s top-line revenue, which achieved a compound annual growth rate (CAGR) of seven percent, and an EBITDA CAGR of 12 percent during the 10-year holding period.

In addition to significantly improving efficiency and productivity – EBITDA increased from 33 percent to 54 percent between 2003 and 2013 – MIRA was also able to improve user satisfaction, expand Arlanda’s customer base and diversify its range of products.

But one of the elements that impressed judges most was MIRA’s ability to take a constrained asset and create new revenue streams. It did so by negotiating track access arrangements to introduce third-party traffic. This in turn enabled Arlanda Express to generate revenues from passengers who would not have used the service otherwise. Macquarie introduced a ‘slow-stopping’ service, for passengers not looking to travel to or from Stockholm Central.

It invested in upgrading the railway’s infrastructure and focused heavily on quality of service, reliability and punctuality. MIRA was then able to raise ticket prices for business passengers, while creating new price categories for more price-sensitive passengers.

“The combination of how they went about improving operations as well as the fact that they really improved the bottom line makes them a clear winner,” one of the judges said, effectively summing up the panel’s view overall.

In addition to choosing a winner, the judges also singled out three highly commended projects:

We will be featuring each one separately in the coming weeks.

Last but not least, a word about our panel of judges, which comprised Michael Barz, a partner at law firm Dentons; Michelle Karavias, global head of infrastructure at consultancy BMI Research; Richard Little, an infrastructure policy consultant and a visiting scholar at Rensselaer Polytechnic Institute; Michael Matheou, a partner at law firm Hogan Lovells; and David Narefsky, a partner at law firm Mayer Brown. 

We would like to thank them for their time, expertise and insights, and are equally grateful to all participants for making our first Operational Excellence Awards such a fascinating contest.