Outlook 2015: Public ambivalence and first exits (0)

Conflicting signals will continue to come from governments and regulators in a context of higher liquidity, secondary sales and savvier LPs, says InfraVia’s Vincent Levita.

This year will likely see a continuation of the love-hate relationship between European public authorities and the infrastructure investor community, reckons the chief executive of Paris-based fund manager InfraVia.

Vincent Levita, who also serves as the firm's chief investment officer, confesses that a number of recent developments have cast a more positive light on what the region’s leaders are trying to achieve. The plan recently announced by newly elected Commission President Jean-Claude Juncker, for instance, aims to facilitate €315 billion of infrastructure investments.

“A majority of European countries agree that investment – in particular in infrastructure – could be crucial in Europe’s efforts to revive economic growth and avoid deflation. There is a real political will.”

Yet he is puzzled by how institutions such as the European Investment Bank and France’s Caisse des Dépôts et Consignations go about implementing this mandate. “They’ve been established to bring momentum to private markets, not to compete with it. Sometimes they intervene to back assets that are already in the sights of investors, they inject liquidity in a market that’s already liquid, which can’t bring a good outcome.”

More troubling still is the attitude of regulators, he says, with turmoil in markets as diverse as France, Spain, Norway or Germany potentially bubbling to the surface.

But developments are more encouraging on other fronts. “Liquidity is back – at all levels. The market offers depth, tenure, leverage, everything we like.”

A number of funds are also sealing their first realisations, Levita notes. Some are straight sales by private equity-style funds, such as Antin or Cube, showing that a first generation of funds is now reaching maturity.

But more intriguing, Levita finds, are the sales of whole portfolios, such as the transaction that saw DIF’s debut fund land in the hands of Aberdeen Asset Management last month. “This could potentially evolve towards a fully-fledged secondaries market.”

Such developments contribute to the growing sophistication of limited partners (LPs), according to Levita, which show a greater will to be more actively involved in making and managing investments. “Ten years ago we were obliged to evangelise investors. But now we’re speaking with people who know the asset class, are already exposed to it, and will ask what’s special about your approach.”

He thinks the industry will soon reach its natural balance, with a number of LPs investing in assets directly and others which, having tried, choose to come back to a model based on a mix of fund commitments and co-investments.