‘No limit’ to AXA IM Real Assets’ potential investments in infra

CEO Izabelle Scemama said the French asset manager is interested in ‘the classic infrastructure sectors’, but not PPPs where returns are ‘more challenging’.

The chief executive of AXA Investment Managers – Real Assets has reiterated the French asset manager’s ambition to become a “global player” in infrastructure, including through an expansion of its equity investments.

Isabelle Scemama, who was appointed to the role in February 2017, told Infrastructure Investor there was “no limit” to the size of the firm’s potential investments in the asset class in the long term.

AXA IM Real Assets manages approximately €6 billion of infrastructure debt investments on behalf of the AXA Group and third parties. This makes it the fourth-largest infrastructure debt manager in the world according to Infrastructure Investor’s inaugural debt ranking.

The firm, which has been rebuilding its equity capabilities since fund manager Ardian spun out in 2013, also manages €1 billion of infrastructure equity investments on behalf of AXA Group exclusively.

“The objective is to continue to grow on behalf of AXA [Group] and third-party clients,” Scemama said. “We have invested in infrastructure equity so far on behalf of the AXA Group only. We continue to expand with an appetite that is quite significant from AXA [Group] and, in the future, from possible co-investors.”

The firm has only made equity investments in western Europe to date. These include a 43 percent stake in Atlande, the concessionaire of France’s A63 motorway, and a 15 percent stake in UK rolling stock business Agility Trains West.

Scemama indicated that this could change over the long term, but emphasised that the firm would not rush into new markets. In her view, smaller and more competitive markets, like Australia, or less diverse markets, such as North America, do not present as many opportunities as the firm’s home region.

“In those markets, size is critical because it’s the way to differentiate [yourself] from the competition,” she said. “If you are looking for small assets there are plenty of players capable of going for those. But if you want to get access to the best assets, generally they are more costly, and you need size. So that’s [our] strategy.”

Scemama said the firm was interested in the “classic infrastructure sectors” across both equity and debt, including transport, energy and digital infrastructure. However, she said it was not interested in long-term public-private partnership deals because returns were “more challenging”.

One of the firm’s biggest challenges according to Scemama, is managing the growth of capital available across all asset classes.

“You have plenty of capital available for private assets, not just in infrastructure,” she said. “You have to be very disciplined with the capital you raise and strategic in the way you deploy it.

“What matters for us is not to compete in those very competitive markets and go for the crazy prices, but to find the best investment opportunities.”

Scemama said the rise of populist governments in Europe was also a challenge for regulated infrastructure assets. However, she expressed confidence in the UK over the long term in all asset classes.

“Brexit is an issue and what is happening in the UK is challenging, but we are underweight in the UK. I strongly believe in the UK in the long run, and in the London market for real estate in particular. Being underweight there is probably good news because when the entry point materialises we will have capability to expand there.”